I see new posts on a regular basis saying "I'm thinking of signing up to this site, what do people think? It's only $2 so I think I'm going to join." or "I've just signed up to this, here's my referral link, please join me, it's only $2!" and when I head to the site it's a simple pyramid scheme.
From Wikipedia:
Quote:
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered. It has been known to come under many guises.
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The essential idea behind each scam is that the individual makes only one payment, but is promised to somehow receive exponential benefits from other people as a reward. A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people, or receive bonuses through other people they refer. Each sale includes a fee to the original seller.
Clearly, the flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers. Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves. To embellish the act, most such scams will have fake referrals, testimonials, and information.
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The word 'pyramid' isn't often used these days as it has come to have a negative connotation, but a difference in terminology does not mean a difference in results, or legality.
These schemes are illegal in many countries, including the US and UK. Of course the Internet provides the perfect space for scammers to create a scheme, milk it for a couple of months, then shut it down and create a new one, thereby greatly reducing their risk of being caught. Police forces simply don't have the resources to chase down such 'cyber crime'.
So if you have no ethics and want to make a quick buck then starting such a scheme is a pretty good idea. Register a domain name along the lines of instantmoneymatrix.com (hell, you might as well use instantmoneymatrix.info, those domains are only about a dollar a year), spend five minutes putting up a crappy website filled with spelling mistakes (this is optional, but most of these sites seem to use this model so I guess it must work) and then post on a few forums containing people looking to make some quick and easy cash.
If anybody is still unsure as to why these things are scams, then just break it down a little. Imagine I come up to you in the street and ask you to give me £10. In return for this £10 I'll allow you to go and ask somebody else for £10, £5 of which you have to give to me. All you have to do is find four people willing to do this and you've doubled your money! You can't lose! It's amazing!
This simplified example shows just how ridiculous it is. The guy who started it will make quite a bit of money. Some of the people who joined early on might make a bit of cash. But the majority of people will lose their money, they are simply donating it to those further up the pyramid.
So not only are you likely to lose any money you put into such a scheme, but if you do happen to make some cash then you are making it by scamming others. That is the
only way to make money from these schemes. And if you're happy with scamming others then you may as well just start your own scheme and make some real cash.
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