Beware of Pyramid schemes!

You may have heard of them and if not you might sooner or later receive a message offering you a business opportunity which is a Pyramid Scheme. You will be offered the chance of making a huge amount of money, and the method is detailed in an explanation. From a casual look, it may seem plausible and quite a brilliant idea. Well, there are many ways of making a fortune, but there is a problem with pyramid schemes and I will explain why, after I've explained what a pyramid scheme is.
WHAT IS A PYRAMID SCHEME?
An illegal business that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered. You have to pay a small sum to someone first. This is sometimes connected with a deal involving signing up with some kind of money mailing company or sometimes it's a matter of sending cash. You pay the money to Person1 on the list. The list has three (or more) people on it, and then you move everyone along the list up by one step, put your own name on the list, and wait for the money to come rolling in. The letter will tell you that this is a sure way for everyone to make a fortune, and the explanation seems convincing. After all, if you have been convinced by it and sent the money, others will, so sooner or later an increasingly large number of people will be paying YOU money. Sounds so brilliant idea, eh? Then comes the questions..then WHAT'S WRONG WITH PYRAMID SCHEMES?
Well, let's not knock off an idea just because it promises to make a fortune. That would be ignorant, as there ARE many ways to make a fortune, some of which have not been discovered bu then It pays to not be too skeptical also. With pyramid schemes, SOME people WILL make a fortune..majority wont, so, what's wrong with these schemes and why should you avoid them? The problem is the mathematics, which can be explained logically and the problem exposed. You don't need Advanced Level Exam mathematics to see this, but O-level helps. Part of the trouble is that the proponents of pyramid schemes will try to distract you from the mathematical fault. Here, as clearly as can be explained, is the fault: For every person in the scheme who makes money, a preset number (n) will have to pay out money. For any level of the scheme, an ever-increasing next-level will be required. So, even though YOU might make money, sooner or later a lot of people will be sold a deal which will LOSE MONEY. So, some will make money, but others will lose....majority of them.
If this sounds too complex to understand, a simpler explanation will do: As no money is being actually generated and it's just being moved about, there is no real wealth to be made, at least not in the long term, by everyone. So, to sum it up, although a few people may get rich, the chances are it won't be you. Furthermore, whether you make money or not, a very large number of other people will lose money. It's a mathematical fact about the system.
The reason why pyramid schemes fool a lot of people into paying money into them is because, like the Impossible Triangle, it looks convincing from any angle. Most people aren't clever enough to figure out the whole picture and see the fundamental fault in it.
Pyramids schemes are illegal in some countries and not in some other countries, but this is largely irrelevant. People need to be wary of the hazards and should not jus sit back and wait to be protected by law against folly.
Pyramid schemes are sometimes disguised as MLM / Multi-Level Marketing, but the question one should ask him/herself is whether there’s a real product being sold and if not, then this is obviously a pyramid scheme.
Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods and services to the public.
A Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no product to sell and pays no commission to investors who recruit new "members." Instead, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program. In English, there is an expression that nicely summarizes this scheme: It's called "Robbing Peter to pay Paul."
Many of you may be familiar with Ponzi and Pyramid schemes reported in the local and international financial news. Both Ponzi schemes and pyramids are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. Yet, both pyramid and Ponzi schemes are illegal because they inevitably must collapse. No program can recruit new members forever. Every pyramid or Ponzi scheme collapses because it cannot expand beyond the saturation point of the population. When the scheme collapses, most investors find themselves at the bottom, unable to recoup their losses.
Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing Businesses. Multilevel marketing programs also known as MLM's, unlike pyramid or Ponzi schemes, MLM's have real products to sell. More importantly, MLM's actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM's may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.
This is actually the most fundamental difference between a legitimate MLM and an illegal Pyramid scheme and when you know this, you will be able to differentiate the wheat from the chaff because when the deal seems so good...there's a catch somewhere.