How to Identify and Avoid Pyramid Schemes

 
Finding a reliable way to make some extra money is important for many people. While there are plenty of great ways that you can make a little more money, or even have a full-time job through a non-traditional source, there are many different types of pyramid schemes out there today that could prove to be very problematic. In a pyramid scheme, a business owner or investor normally will have to invest some money upfront with the hope of making more in the future.
Unfortunately, some of these schemes end up toppling and falling apart, which causes many people to lose a lot of money. While this risk does exist, there are several tips that can be followed that could help anyone to identify and avoid these pyramid schemes.

Pyramid Schemes Sound Too Good to Be True

One of the most common signs that you are being recruited into a pyramid scheme is if something sounds too good to be true. With a pyramid scheme, you may be approached by someone that is offering you an amazing investment return, a no-risk venture, or even a once in a lifetime opportunity. In the vast majority of situations, these promises are completely unfounded and do not highlight the actual risk of the venture.

Aggressive Recruiting

Before you start even discussing the venture in further detail, you should be wary of any venture in which someone is pushing you hard to consider the opportunity. If an opportunity is very good and publicly available, it should not require a pressure-filled sales tactic in order to find more people to work for it.

Pyramid Schemes Focus on Recruiting Others

If you are learning more about an opportunity, you should be cautious about any venture that has income based on your ability to recruit more people to join. With a pyramid scheme, the entire business concept relies on new people joining and paying initial fees. If this is the case with the scheme and you need to get more people to give you an initial investment, it could be a sign of a pyramid scheme. While this process may work for the first few layers of people, it will eventually fall apart and people will lose out.

Product or Service You Are Selling is of Low Quality

There are many different pyramid schemes out there today that sell some form of a product or service. This can include selling personal care products, nutrition supplements, fitness equipment, or any other product. Before you start getting into any new business, it is important that you fully examine the product. If it becomes clear that the product you are selling is ineffective or cheaply made, you should avoid getting involved. In these situations, the inventory you buy will have little actual value and you could struggle to make sales.

Do Your Research

Ultimately, when you are going to get into any type of business venture, it is very important that you do your own research on the opportunity. The company that you are joining should have a full prospectus that gives you the details you need to understand how it works. You should also work to figure out how many people are successful versus how many end up failing. If a full prospectus is not available, it could be a red flag, but you should still be able to get some detail by doing a full Internet search online.