pyramid selling
Downstream profit scheme
Pyramid selling is a business model where participants earn money primarily by recruiting new participants rather than selling actual products.
Each recruit pays fees that flow upward to earlier members, creating a pyramid structure that inevitably collapses when recruitment slows.
Most pyramid schemes are illegal, though they often disguise themselves as legitimate multi-level marketing: The company claimed to sell supplements, but it was really pyramid selling.
Having several stacked floors
- downlineSubordinate network members
- uplineRecruiter in network marketing
- recruitmentSeeking new personnel
- networkInterconnected system
distributors · commissions · levels · hierarchy · sponsors · referrals · enrollment · tiers
Dishonest money-making scheme
- fraudIntentional criminal trickery
- schemeCalculated strategy, often secretive
- manipulationUnderhanded control of others
- misleadingCausing false beliefs
false promises · swindle · con · sham · deception · trickery · exploitation · predatory
Forbidden by statute
- Ponzi schemeFraudulent returns from newcomers
- prosecutionPursuing legal charges
- regulationOfficial rules governing conduct
- FTCCommerce regulatory agency
enforcement · crackdown · penalties · class action · settlement · investigation · cease and desist · consumer protection
Things subtracted from standing
- debtMoney owed another
- investmentDeploying capital for returns
- feesCosts for services
- buy-inAgreement to participate
starter kit · quotas · returns · earnings · sunk cost · financial ruin · bankruptcy · break-even
multi-level
Having several stacked floors
- downlineSubordinate network members
- uplineRecruiter in network marketing
- recruitmentSeeking new personnel
network · distributors · commissions · levels · hierarchy · sponsors · referrals · enrollment · tiers · organization
scam
Dishonest money-making scheme
- fraudIntentional criminal trickery
- schemeCalculated strategy, often secretive
- manipulationUnderhanded control of others
misleading · false promises · swindle · con · sham · deception · trickery · exploitation · predatory · misrepresentation
illegal
Forbidden by statute
- Ponzi schemeFraudulent returns from newcomers
- prosecutionPursuing legal charges
- regulationOfficial rules governing conduct
FTC · enforcement · crackdown · penalties · class action · settlement · investigation · cease and desist · consumer protection · securities
losses
Things subtracted from standing
- debtMoney owed another
- investmentDeploying capital for returns
- feesCosts for services
buy-in · starter kit · quotas · returns · earnings · sunk cost · financial ruin · bankruptcy · break-even · overhead
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