Content deleted Content added
rewrote the lead Tags: Reverted Visual edit |
→Connection to multi-level marketing: not all countries permit mlms |
||
| (11 intermediate revisions by 9 users not shown) | |||
Line 3:
{{Lead rewrite|date=July 2024}}
[[File:Pyramid scheme diagram.svg|thumb|upright=1.3|The unsustainable exponential progression of a classic pyramid scheme in which every member recruits six new people. To sustain the scheme, the 2.2 billion people in the 12th layer would be required to recruit 13.1 billion more people for the 13th layer, even though there are not nearly enough [[World population|people in the world]] to achieve that.]]
A '''pyramid scheme''' is a
Pyramid schemes have existed since at least the mid-to-late 19th century in different guises. Some [[multi-level marketing]] plans have been classified as pyramid schemes.<ref name="Smith1984" />
Line 15:
=== The "eight ball" model ===
[[File:Airplane game.svg|thumb|The "eight-ball" model contains a total of fifteen members. Note that
Many pyramids are more sophisticated than the simple model. These recognize that recruiting a large number of others into a scheme can be difficult, so a seemingly simpler model is used. In this model each person must recruit two others, but the ease of achieving this is offset because the depth required to recoup any money also increases. The scheme requires a person to recruit two others, who must each recruit two others, and so on.
Line 65:
The U.S. Federal Trade Commission warns against becoming involved "in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."<ref name="ftc.gov">{{cite web |url=http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv08.shtm |title=Multilevel Marketing |date=4 January 2018 |publisher=Federal Trade Commission |access-date=2018-06-20 |quote=There are multi-level marketing plans – and then there are pyramid schemes. Before signing on the dotted line, study the company's track record, ask lots of questions, and seek out independent opinions about the business.}}</ref>
Some commentators contend that MLMs in general are nothing more than legalized pyramid schemes.<ref name="Carroll 2003 235">{{cite book |last=Carroll |first=Robert Todd |title=The Skeptic's Dictionary: A Collection of Strange Beliefs, Amusing Deceptions, and Dangerous Delusions |publisher=Wiley |year=2003 |page=[https://archive.org/details/skepticsdictiona00carr_024/page/n241 235] |url=https://archive.org/details/skepticsdictiona00carr_024 |url-access=limited |isbn=0-471-27242-6}}</ref><ref name="Coenen 2009 168">{{cite book |last=Coenen |first=Tracy |title=Expert Fraud Investigation: A Step-by-Step Guide |publisher=Wiley |year=2009 |page=[https://archive.org/details/expertfraudinves00coen_262/page/n172 168] |url=https://archive.org/details/expertfraudinves00coen_262 |url-access=limited |isbn=978-0-470-38796-2}}</ref><ref name="Salinger Editor 2005 880">{{Cite book |editor-last=Salinger |editor-first=Lawrence M. |title=Encyclopedia of White-Collar & Corporate Crime |publisher=Sage Publishing |year=2005 |volume=2 |page=880 |isbn=0-7619-3004-3}}</ref>
== Legality ==
Pyramid schemes are illegal in many countries or regions including [[Albania]],<ref>{{Cite journal |last=Jarvis |first=Christopher |date=March 2000 |title=The Rise and Fall of Albania's Pyramid Schemes |url=http://www.scamwatch.gov.au/content/index.phtml/itemId/694266|archive-url=https://web.archive.org/web/20120406122435/http://www.scamwatch.gov.au/content/index.phtml/itemId/694266 |archive-date=6 April 2012 }}</ref><ref>{{cite web|url=http://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html#_Toc320188009 |title=Competition and Consumer Act 2010 – Schedule 2, Division 3 – Pyramid schemes |publisher=Austlii.edu.au |access-date=2013-04-02}}</ref> [[Austria]], [[Belgium]],<ref>{{Cite web |url=http://economie.fgov.be/nl/geschillen/klachten/welke_klachten_terecht_ADCB/Verkopen/Piramideverkoop/ |title=Piramideverkoop - Geschillen en klachten - Home |access-date=2014-10-09 |archive-url=https://web.archive.org/web/20141015061007/http://economie.fgov.be/nl/geschillen/klachten/welke_klachten_terecht_ADCB/Verkopen/Piramideverkoop/ |archive-date=2014-10-15 }}</ref> [[Bahrain]], [[Bangladesh]],<ref>{{Cite web|date=2013-09-06|title=Govt bans pyramid marketing|url=https://www.thedailystar.net/news/govt-bans-pyramid-marketing|access-date=2020-06-14|website=[[The Daily Star (Bangladesh)|The Daily Star]]|language=en}}</ref> [[Brazil]], [[Canada]],<ref>{{Cite web|url=http://www.antifraudcentre-centreantifraude.ca/fraud-escroquerie/types/pyramid-pyramide/index-eng.htm|title=Pyramid scams|date=March 11, 2015|website=antifraudcentre-centreantifraude.ca|access-date=November 2, 2018|archive-date=November 13, 2018|archive-url=https://web.archive.org/web/20181113045155/http://www.antifraudcentre-centreantifraude.ca/fraud-escroquerie/types/pyramid-pyramide/index-eng.htm|url-status=dead}}</ref> [[People's Republic of China|China]],<ref name="Regulation on Prohibition of Pyramid Selling">{{cite web |url=http://www.fdi.gov.cn/1800000121_39_767_0_7.html |title=Regulation on Prohibition of Pyramid Selling |publisher=fdi.gov.cn |access-date=2019-01-23 |archive-date=2019-01-23 |archive-url=https://web.archive.org/web/20190123223635/http://www.fdi.gov.cn/1800000121_39_767_0_7.html }}</ref> [[Colombia]],<ref>{{cite news| url=http://news.bbc.co.uk/1/hi/world/americas/7736124.stm | work=BBC News | title=Colombia scam: 'I lost my money' | date=November 18, 2008 | access-date=2010-04-12}}</ref> [[Denmark]], the [[Dominican Republic]],<ref>{{cite web|url=http://www.camaradediputados.gov.do/masterlex/mlx/docs/24/106/1BA5/5FFE/6000.pdf|title=Proyecto De Ley Que Prohíbe La Venta Bajo El Esquema Piramidal|language=es|access-date=2011-02-23|archive-url=https://web.archive.org/web/20160429134532/http://www.camaradediputados.gov.do/masterlex/mlx/docs/24/106/1BA5/5FFE/6000.pdf|archive-date=2016-04-29}}</ref> [[Estonia]],<ref>{{cite web|url=https://www.riigiteataja.ee/ert/act.jsp?id=13328494|title=Tarbijakaitseseadus|language=et|trans-title=The Consumer Protection Law of Estonia|at=§12{{sup|3}}(8) #14|access-date=2010-10-11}}</ref> [[Finland]],<ref>
[[Peru]], the [[Philippines]],<ref>[https://query.nytimes.com/gst/fullpage.html?res=9C05E4DA1539F933A05750C0A9659C8B63 NYtimes.com], "Investors in Philippine Pyramid Scheme Lose over $2 Billion"</ref> [[Poland]],<ref>{{Cite web |date=22 January 2021 |title=First penalty imposed for soliciting into so-called pyramid-type schemes |url=https://uokik.gov.pl/news.php?news_id=17179 |publisher=Office of Competition and Consumer Protection}}</ref> [[Portugal]], [[Romania]],<ref>[http://www.ziua.ro/display.php?data=2006-07-12&id=203369 Explozia piramidelor] {{Webarchive|url=https://web.archive.org/web/20160506094455/http://www.ziua.ro/display.php?data=2006-07-12&id=203369 |date=2016-05-06 }} ''Ziarul Ziua, 12.07.2006''</ref> [[Russia]], [[Serbia]],<ref name="paragraf">{{cite web|url=http://www.paragraf.rs/propisi/zakon_o_trgovini.html|title=Zakon o trgovini | Republika SRBIJA|website=Paragraf|access-date=2020-12-20}}</ref> [[South Africa]],<ref>[http://www.whitecollarcrime.co.za/news.php?item.95 Whitecollarcrime.co.za] {{Webarchive|url=https://web.archive.org/web/20081201060359/http://www.whitecollarcrime.co.za/news.php?item.95 |date=2008-12-01 }}, Pyramid Schemes</ref> [[Singapore]],<ref>{{Singapore legislation|title=Multi-Level Marketing and Pyramid Selling (Prohibition) Act|cap=190|ed=2000}}, section 3</ref> [[Spain]], [[Ethiopia]], [[Sri Lanka]],<ref>[http://www.documents.gov.lk/files/act/2005/2/02-2005_E.pdf Pyramid Schemes Illegal Under Section 83c of the Banking Act of Sri Lanka] Department of Government Printing, Sri Lanka</ref> [[Sweden]],<ref>[http://lagen.nu/2008:487 lagen.nu] – Tillkännagivande (2008:487) med anledning av marknadsföringslagen (2008:486)</ref> [[Switzerland]], [[Taiwan]], [[Thailand]],<ref name="สมาคมการขายตรงไทย">[http://www.tdsa.org/download/piramid.pdf TDSA.gov] {{webarchive|url=https://web.archive.org/web/20090220075443/http://tdsa.org/download/piramid.pdf |archive-url=https://web.archive.org/web/20060506235813/http://tdsa.org/download/piramid.pdf |archive-date=2006-05-06 |url-status=live |date=2009-02-20 }}, ข้อมูลเพิ่มเติมในระบบธุรกิจขายตรงและธุรกิจพีระมิด by Thai Direct Selling Association (in Thai)</ref> [[Trinidad and Tobago]],<ref> {{cite web |url=https://tt.loopnews.com/content/government-outlaws-ponzi-pyramid-schemes|title=Government outlaws ponzi, pyramid schemes. |publisher=tt.loopnews.com |date=2022-11-16 |access-date=2023-10-03}}</ref> [[Turkey]],<ref>{{cite web|url=http://www.cnnturk.com/2010/turkiye/05/14/saadet.zinciri.operasyonu.60.gozalti/576283.0/index.html |title=Saadet zinciri operasyonu: 60 gözaltı |publisher=Cnnturk.com |date=2010-05-14 |access-date=2013-04-02}}</ref> [[Ukraine]],<ref>[http://en.interfax.com.ua/news/general/175882.html Rada at first reading passes bill on banning financial pyramid schemes in Ukraine], [[Interfax-Ukraine]] (20 November 2013)</ref> the [[United Kingdom]],<ref>{{cite web|title=Pyramid scheme fraud|url=http://www.actionfraud.police.uk/fraud_protection/pyramid_schemes|website=[[Action Fraud]]|publisher=[[City of London Police]]|access-date=2016-07-05}}</ref> and the [[United States]].<ref name="Valentine Speech"/>
Line 93:
A number of authorities around the world declared TVI Express to be a pyramid scheme in 2010 and 2011, including the [[Australian Competition & Consumer Commission]], the [[Bank of Namibia]], and the [[Central Bank of Lesotho]]. TVI Express, operated by Tarun Trikha from India, has apparently recruited hundreds of thousands of "investors", very few of whom, it is reported, have recouped any of their investment.<ref name="ACCC-TVIExpress">[http://www.accc.gov.au/content/index.phtml/itemId/928564/fromItemId/142 ACCC obtains restraining orders against operators of alleged pyramid selling scheme TVI Express] {{webarchive|url=https://web.archive.org/web/20110602080313/http://www.accc.gov.au/content/index.phtml/itemId/928564/fromItemId/142 |date=2011-06-02 }} ''Australian Competition and Consumer Commission''</ref><ref name="Namibia-TVIExpress">[http://www.republikein.com.na/die-mark/bon-warns-public.115812.php BoN warns public about TVI Express] {{Webarchive|url=https://web.archive.org/web/20111004065745/http://www.republikein.com.na/die-mark/bon-warns-public.115812.php |date=2011-10-04 }} ''Bank of Namibia''</ref><ref name="Lesotho-TVIExpress">[http://www.centralbank.org.ls/news/TVI%20Express.htm BoL warns public about TVI Express] {{webarchive|url=https://web.archive.org/web/20111003001143/http://www.centralbank.org.ls/news/TVI%20Express.htm |date=2011-10-03 }} ''Bank of Lesotho''</ref><ref name="LE-TVIExpress">[http://www.timeslive.co.za/news/2011/08/14/promises-broken-claim-cops South African Sunday Times on TVI Express] ''[[Sunday Times (South Africa)]]''</ref><ref name="CWBotswana">[http://consumerwatchdogbw.blogspot.com/search/label/TVI%20Express Consumer Watchdog Botswana on TVI Express] ''Consumer Watchdog Botswana''</ref>
[[BurnLounge]], Inc. was a multi-level marketing [[
In August 2015, the United States FTC filed a lawsuit against [[Vemma|Vemma Nutrition Company]], an Arizona-based [[dietary supplement]] Multi-Level Marketing firm, accused of operating an illegal pyramid scheme. In December 2016, Vemma agreed to a $238 million settlement with the FTC, which banned the company from "pyramid scheme practices" including recruitment-focused business ventures, deceptive income claims, and unsubstantiated health claims.<ref>{{cite web|title=Vemma Agrees to Ban on Pyramid Scheme Practices to Settle FTC Charges|url=https://www.ftc.gov/news-events/press-releases/2016/12/vemma-agrees-ban-pyramid-scheme-practices-settle-ftc-charges|website=FTC.gov|date=15 December 2016 |access-date=2016-12-22}}</ref><ref>{{cite web|title=Vemma reaches $238 million settlement with FTC|url=https://www.truthinadvertising.org/vemma-pay-millions-settlement-ftc/|website=TruthInAdvertising.org|access-date=2016-12-22}}</ref>
| |||