Pyramid Schemes

Every once in a while I see someone on social media asking people to private message them for a quick and easy money making opportunity (or something to that effect). I always send a message asking for information. Not because I have any interest in participating, I'm just curious.

90% of the time it's some amway-esque multi level marketing program.

The other 10% are straight up mail cash and get more back pyramid schemes.

100% of the time I block the person after getting a response ... I had my sister blocked for several months while she tried selling some kind of makeup product. Crap like that annoys the hell out of me.

It seems like social media has given a revival to these types of things, but I know they've been happening forever. A guy I know was telling me how he got caught up in a pyramid scheme in the 80's and eventually ended up with a suitcase of around $30k cash. He saw a news report about the Feds busting pyramid schemes and promptly sent every dollar back to it's original sender.

These things bother the hell out of myself (and most people, I think?) too. I've been presented with them 4-5 times in my life from FRIENDS and FAMILY and it's sad, because they don't get the impossibility of actually making money and they're trained (like religion) to just simply denounce anyone that's a non-believer.

Most recently, I had a good buddy of mine (still to this day a decently good friend) say he was gonna be in the area and wanted to hang out and play some Halo with a few other friends I had over. I said sure, and when he showed up he didn't even tell me what was going on, he just said "oh my mom is here and she was hoping to talk to you about something." So I was like "um, okay..." then she procedes to USB in to my big screen and give a presentation to everyone about their 100% typical not even MLM pyramid scheme. Like some of the MLM's are a joke, but a bit harder to explain/crack, but this was a straight "you recruit 4 ppl, and they recruit 4 ppl, etc, etc" to the point where I wanted to just make fun of her, but this was my friends mom. I felt bad. Like, how can you get sucked up in to this crap just because someone says "omg you're gonna make a million your first year, if you try!" They had all the typical crap too... Come to our meeting this saturday and omg this "big wig" is gonna GRACE us with his presence. He's a billionaire, you should come just to meet him of course he's gotta be a smart business man! I actually asked who their "big shot" was before she even mentioned it, and it took her by surprise.

I then attempted kindly to show them with a simple piece of paper and a pyramid, plus algebra, how it's literally impossible to make any kind of money from this scheme and only the top 1% would EVER make money and it's by ripping everyone else off. Then I said that it's sad because they put the pressure on you to go SCAM it to your family/friends. My little brother got caught up in it, because he's the type to try to find easy roads where you don't have to work and you'll just get money. Anyone who was a non-believer in their 'system' was considered a "drive by" where they'd drive by in their 1 month lease BMW they get for signing 4 ppl up or something like that. Looking back now that's kinda a funny term to use, but alas, I never saw any BMW's cross my path and the whole thing died out about 3-4 months later. Even sadder, my buddy had a "house party" that weekend where everyone was hanging out, drinking, having fun, and they literally stopped the party to go in to the other room so she could give all the drunk 20 somethings a presentation. Just sickening...

Someone tried to get me to join in on some "healthy" energy drink BS pyramid scheme quite a while ago. I asked how the money was made and he kept deflecting. I asked how much money he was actually making (because f*** it, if it's worth it, why not?)....and he kept saying how much money his friend was making because he had like 200 people sign up under him. I'm like bruh, I don't even know 20 people let alone 200, ain't no way I'm gonna be able to scam that many people.


HOWEVER, yes, they absolutely can (I did not say DO) make money, I think. At least the one I was "introduced" to, you buy like $500 or some BS amount of some nonsense every month. I think the theory or something is that you can sell that $500 worth of nonsense to regular folk who aren't part of the pyramid system. IF you can sell that much, then you're making money.

Oh, for fun stories I'll give one more. I went away to college, but driving distance in a day away at least. After college I was looking to move back to my hometown, so while I had a job near my college city, I was going home on the weekend for interviews in my home town. I had 3 interviews set up one weekend and made the drive home. The first one, I get to the location and it looks a little sketch, but eh, could look worse. I go upstairs and am greeted at the door by someone that says "are you hear for the seminar?" I said no, I'm here for a computer programming interview (the guy found me on Monster and had sent me a real rec for a computer programming job in the area). He said, oh, everyone here today is here for this, so grab a name tag and have a seat in here. Sure enough, there's old, young, and people who I'm sorry but looked like they didn't even know what a computer was sitting in this room. So my BS detector is through the roof at this point and I'm pretty pissed about it (had already heard these scams a couple times in my life at this point). So someone comes out and they launch a video immediately about how your life could be so easy if you were financially independent and here's how you can do it (without actually giving any specifics other than our company rocks join us). It was only a few minute video (short production budget hmmm no wonder) and as soon as the lights came on I made a move towards the door. The idiot presenting actually had the idea to stop me and say "hey where are you going? don't you want to be financially independent?" Wrong guy to say that to... So of course I calmly and politely expalin that I was lured here with a real programming position and that what they're selling is a pyramid scheme and after all what real company has ever CHARGED you money to be trained? etc, etc... at that time the guy that actually got me there came up and was like "Hey Romes, I'm X I was the one you spoke with on monster!" I'm like, what the hell is this? I'm here for a computer programming position you sent me. He mostly ignored me and said yes we're looking to on board a lot of people just listen to the rest of the seminar! At that point I got up in his face and told him he's lucky I have other REAL interviews in the area this weekend since I drove from quite a ways to be here and that I don't either beat the sh*t out of him or sue his ass. At that point he realized I wasn't falling for the BS and he just got really white faced and didn't say anything for a moment then walked away. I've never hit a random person, but in hindsight that's one person that really frickin deserved it.

Quote: RS

...HOWEVER, yes, they absolutely can (I did not say DO) make money, I think. At least the one I was "introduced" to, you buy like $500 or some BS amount of some nonsense every month. I think the theory or something is that you can sell that $500 worth of nonsense to regular folk who aren't part of the pyramid system. IF you can sell that much, then you're making money.

This is the multi-level marketing. Where their main goal is to get you to sign people up, but to avoid being 'technically' a pyramid scheme they do have real products they push out and sell. And on face value it looks like yes you can up-charge and make a little, but no you can't. 99% of these companies (mary-K, lularoe, etc, etc) all MAKE you buy $X per month of their product. Thus you can try to peddle it off but you're basically trying to sell a popsicle for $10 on every item they FORCE you to buy EVERY month. Oh, and htey have contractually obligated mins and maxes you can sell the products for, so even though you're an "entrepreneur" you can't even set your own prices or take a smaller loss on your inventory by selling it at 90% value. They want you to fail. They don't care if you sell it or not, because you're basically a CONTRACTED CUSTOMER when you PAY to sign up to work for them. After definitely failing to push the product and getting caught up with thousands of dollars sitting in your garage, you'll realize the only way to make money and get out of the hole is to RECRUIT OTHERS because that's when you don't have to spend money yet you get a direct revenue stream. Thus, they pretend like there's a product you can sell (and make money) but you can't, and in the end you're driven to recruitment, which is what it's all about, always.

Hence why your friend was signing you up, and not selling you the $100 bottle of miracle juice.

Quote: Romes

Oh, for fun stories I'll give one more. I went away to college, but driving distance in a day away at least. After college I was looking to move back to my hometown, so while I had a job near my college city, I was going home on the weekend for interviews in my home town.

I had 3 interviews set up one weekend and made the drive home. The first one, I get to the location and it looks a little sketch, but eh, could look worse. I go upstairs and am greeted at the door by someone that says "are you hear for the seminar?" I said no, I'm here for a computer programming interview (the guy found me on Monster and had sent me a real rec for a computer programming job in the area). He said, oh, everyone here today is here for this, so grab a name tag and have a seat in here. Sure enough, there's old, young, and people who I'm sorry but looked like they didn't even know what a computer was sitting in this room.

So my BS detector is through the roof at this point and I'm pretty pissed about it (had already heard these scams a couple times in my life at this point). So someone comes out and they launch a video immediately about how your life could be so easy if you were financially independent and here's how you can do it (without actually giving any specifics other than our company rocks join us). It was only a few minute video (short production budget hmmm no wonder) and as soon as the lights came on I made a move towards the door.


The idiot presenting actually had the idea to stop me and say "hey where are you going? don't you want to be financially independent?" Wrong guy to say that to... So of course I calmly and politely expalin that I was lured here with a real programming position and that what they're selling is a pyramid scheme and after all what real company has ever CHARGED you money to be trained? etc, etc... at that time the guy that actually got me there came up and was like "Hey Romes, I'm X I was the one you spoke with on monster!" I'm like, what the hell is this? I'm here for a computer programming position you sent me. He mostly ignored me and said yes we're looking to on board a lot of people just listen to the rest of the seminar!

At that point I got up in his face and told him he's lucky I have other REAL interviews in the area this weekend since I drove from quite a ways to be here and that I don't either beat the sh*t out of him or sue his ass. At that point he realized I wasn't falling for the BS and he just got really white faced and didn't say anything for a moment then walked away. I've never hit a random person, but in hindsight that's one person that really frickin deserved it.

There's an ENTER key for a reason.



In college, there was some stupid thing on campus one day. I don't know what it's called, but there was a table and an umbrella and people trying to get people to join their company and work for them. Like a career-day kinda thing in high school. So I asked them what it was and they were pretty vague what it was. I'm like alright I'll go to some seminar or w/e but is it like sales n sh** because I ain't doing none of that. They like nah it's all good it's easy.

I'm like okay cool, I should probably get responsible and what better way to get responsible than to get a job. So I go to this seminar thing that weekend....I show up in regular clothes because I'm not some stupid frat f** or some lame business major who doesn't know wtf they're doing. All these weirdos be showin' up wearing suits n ties n stuff. I'm thinking nah this ain't for me, but whatever, I'll try it out, see what's up with all the fuss.

Turns out it's door to door knife sales. I learned this about 30 seconds into the seminar. So, I got up and headed for the door, mid seminar. I'm thinking f*** this sh** I ain't doing this, I ain't wasting my time here, peace out. The guy stops me and he's asking me where I'm going. I'm like dude, I'm leaving, I'm not interested in going door to door selling stuff that no one wants to buy. I think he said some more words that I wasn't really listening to....and I'm like, yeah, I'm leaving, I was told this wasn't some sales job. He kept talking (presumably?) and I just walked out without saying nothing else after he finished giving me his stupid spiel.


Hopefully he's still working in that awful job, that would brighten my day.

Years ago I knew someone once who was recruiting for a pyramid scheme. I was kind of ignorant at the time so I said sure, whatever, sounds kind of interesting, send me some more information. Gave him all my contact information and never heard from him again.

Nowadays all these pyramid schemes seem like they're for cheap, stupid crap I would never buy, like candles or some B.S. health supplements. How come I never see any pyramid schemes for actually useful things, like electronics or bicycles or furniture, etc.? On top of that, why would I buy your dumb pyramid scheme candle for $10 when I can go to the store and buy the same product for $2?

I too despise these things. Looked into Herbalife one time ages ago since someone I respected was going to give it a shot, really committing to it. I read the fine print and it actually said that you can't set up a paying pyramid of people you got to sign up and enjoy the benefit of it unless you stayed active . So, if you actually did the near impossible, they were quite ready to take it away from you.

Did you know that it is quite common for members of congress to be Amway reps? Of course none of these guys/gals would ever sell any of the product, and are very unlikely to have ever put any effort into building a pyramid. But if the outfit is going to take your work away from you, that means they can give it to somebody else, and if you give it to congressmen, maybe nobody will demand an end to these fraudulent practices.

I also was fortunate to witness a person who was successful in Tupperware, making a pretty good living anyway. She would be constantly hosting Tupperware parties. She was the complete opposite of me, a soul-less, tireless manipulator basically. That told me that even if it is possible to do well in some of these things, I was not going to be the type of person it would take.

The lowest point of my life was the year following college. I graduated in 88 when the economy was still reeling from Black Monday and nobody was in a mood to hire recent college graduates with no useful experience. I poured over the help wanted ads on a daily basis. Sometimes there would be one about some company expanding into the Los Angeles area and needed some new recruits, preferably college graduates. So, I answered a couple and they turned out to be multi-level companies, not offering a job, but to join their commission-based sales force. One was for Herbalife and another for Cutco knives. I never signed up with either. I walked out of the Cutco interview after having felt I was tricked by a misleading ad. It doesn't help that I couldn't sell a tall glass of cold water to a billionaire dying of thirst. There was a third one too, now that I think about it. Something about sprinkler systems for businesses. Now that I think harder, there was a fourth. Some kind of investment thing. The interview reminded me of the interview scene in the movie Boiler Room. Only this place made you pay for your training and help passing whatever test is needed to pass to sell whatever they were selling.

I'm not against salesmen getting paid according to what they sell but I do oppose tricking people with estimates of enormous earnings and taking advantage of people who are truly looking for a normal job that isn't in sales.

While I am against Pyramid schemes and multilevel marketing plans as well, you can succeed in some. My friends mother has been driving pink Cadillacs for years even though she doesn't personally sell anything anymore.
Another friend got involved in something called newskin or something and ended up having dozens of people hawking overpriced ineffective product that made him thousands of dollars a month for awhile.
My parents( in the 1970s)and one of my housemates( in the 1990s) sold Amway and made some dollars without getting people downstream from them..
I recently met someone involved in several of these mlm plans and he seems to be doing well. I suspect he is the same guy who RS referenced as I met him at a poker game we both were at. He's a natural salesman. Most people aren't. I certainly am not.

Quote: Wizard

The lowest point of my life was the year following college.

Hey, same here. Then again, I had an art degree, so I shouldn't have been surprised.

Quote: TigerWu

Hey, same here. Then again, I had an art degree, so I shouldn't have been surprised.

What did you end up doing with it?

But isn't this the mechanism behind casinos? Lots of people pay for the opportunity, lured in by promises of "Quick Hits", "Mega Millions" and such, but only a few walk away winners.

Quote: RS

HOWEVER, yes, they absolutely can (I did not say DO) make money, I think. At least the one I was "introduced" to, you buy like $500 or some BS amount of some nonsense every month. I think the theory or something is that you can sell that $500 worth of nonsense to regular folk who aren't part of the pyramid system. IF you can sell that much, then you're making money.

Multi-Level Marketing is basically a legal pyramid scheme. It's the same exact concept at it's core, but is legal because it's all based around a real product. A few people do make good money, which is exactly what fuels the fire. I've seen a few Mary-Kay pink Cadillacs on the road ... which is a gift you get after selling something like $10,000,000 of their product.

These companies have a legitimate product, but almost always poor quality and/or expensive. To sell the product, they recruit independent salespeople, who are usually required to purchase a sample kit for $500-$1000. The catch is, they are selling this BS at an absurdly low commission of 5-10%. So all of a sudden, they find themselves needing to sell $5000+ of smart juice chalk powder just to break even. BUT WAIT THERE'S MORE ... the company tells the salesperson there's much more money to be made if they build a team. Because when you build a team, you not only get 5% of the product you sell, but 5% of the sales of each person you recruit, and then 5% of whatever your recruit's recruits sell, and so on. Which is where it starts looking very similar (identical) to a pyramid scheme. Say everyone had to recruit 15 team members to make a profit on their original investment of a sample kit. By level 9 of the recruitment tree (pyramid), you'd exceed the number of humans on earth.

The slimiest part of all of this is that it attracts people who are having a rough go in their careers or financial life, promising they can be a self-employed business owner for a small $500 investment. Then these people start giving the sales pitch to friends and family, who know the person is struggling and they can't say no.

Quote: Wizard

So, I answered a couple and they turned out to be multi-level companies, not offering a job, but to join their commission-based sales force. One was for Herbalife

hedge fund manager bill ackman made and lost a billion dollar short bet against herbalife in 2012 and his fund has lost hundreds of millions. the ftc fined herbalife but did not call it a pyramid scheme. meanwhile it's stock in the last 6 months has gone from about 56 to about 68. most analysts are neutral towards it but some are calling it a buy. herbalife has changed its tune a little bit but it's still rocking and rolling. last year it claimed revenue of close to 5 billion and a gross profit of about 3.5 billion.

https://www.bloomberg.com/view/articles/2017-03-01/for-better-and-worse-ackman-s-still-betting-against-herbalife

Yeah, I've steered people away from Scamway and other products that have lots of adjectives but cost so much more than comparable products.

I knew one woman who invested ten grand in a scheme one week before a circuit court certified the class action at the scheme collapsed. Bad timing. Wondered how she ever got the money if she was so dumb.
Spoke to one guy handing out cards on the street for a lecture, he wasn't an investor just a broke guy working in the hot sun. He had asked if it was legal and I told him its legal to hand out the cards for a lecture but the entire program is fraudulent.

Some people ar wary some are not.

Quote: lilredrooster

hedge fund manager bill ackman made and lost a billion dollar short bet against herbalife in 2012 and his fund has lost hundreds of millions. the ftc fined herbalife but did not call it a pyramid scheme. meanwhile it's stock in the last 6 months has gone from about 56 to about 68. most analysts are neutral towards it but some are calling it a buy. herbalife has changed its tune a little bit but it's still rocking and rolling.

https://www.bloomberg.com/view/articles/2017-03-01/for-better-and-worse-ackman-s-still-betting-against-herbalife

When I was living in the dorms in college, some cute girl down the hall started selling herbalife. I found out because my roomate was trying to smash, but only came back to our room with several cases of shake powder.

Quote: Wizard

What did you end up doing with it?

Nothing.

After I realized an art degree wasn't terribly useful, I joined the Army then used the G.I. Bill years later to go back to school and get a somewhat more useful degree, which led to the job I'm in now.

The girlfriend of a friend of mine (I hope he doesn't see this) sells for Mary Kay and hit me up to by lotion when I mentioned I suffer from dry skin in the winter. So, I've been buying it. I have a difficult time saying "no" to women. To be honest, I find the lotion no better than what I can get at Target but it is 5x more expensive.

At the risk of going off on a target, she has been pressing me to buy this whole kit where you scrub off dead skin cells and then moisturize with something else. I asked my dermatologist about a similar product some girl tried to sell me at the Fashion Show Mall and he said "What's wrong with dead skin sells?" When I had no idea he explained that they protect the living skin cells.

Quote: billryan

While I am against Pyramid schemes and multilevel marketing plans as well, you can succeed in some...

Define succeed. If you mean sell tens or hundreds of thousands of dollars worth of product, then you're correct. If you mean work 40 hours per week and make an 'average' salary, then you are incorrect. As mentioned prior almost ALL of these "companies" have you sign a contract that states you MUST buy a 'resupply' each and every month, regardless if you sell your previous one or not. Combine that with min/max selling rates and a saturated market after 1-2 months and 99.54% of the time you'll find a want-ra-paneur with a garage full of overpriced product they can't sell. So while for the first few months (or even longer pending market saturation) it might look like they're making TONS of money, they're really not.

1) they have a cap on what they can sell it at
2) they don't actually make very much commission at all on it
3) they must put any money they make towards their contractually obligated re-orders
4) eventually the market stops buying (can only hold so many 'parties') and you're left with the inevitable garage of unsold product pissing money down the drain.

Quote: RS

yes, they absolutely can (I did not say DO) make money, IF you can sell that much, then you're making money.

for many years in the late 80s and early 90s i sold furniture on commission. it wasn't a scam - but some full time salespeople made about 17K per year. and a few made about 80k per year. in the early 90s 80k was a lot more than it is now in terms of buying power.

you guys are all haters. I make 99% of my money from reverse funnel systems*. 1% is from AP.

*disclaimer this is theoretical money that I would theoretically make if there were theoretically trillions of people alive in this theoretical world. but EV is EV.

Quote: lilredrooster

for many years in the late 80s and early 90s i sold furniture on commission. it wasn't a scam - but some full time salespeople made about 17K per year. and a few made about 80k per year. in the early 90s 80k was a lot more than it is now in terms of buying power.

When I was buying furniture, the sales guy was telling me they'd owe the store money if they did not make their quota.