pyramid selling
Plural
pyramid sellings
1
a form of multi-level marketing where profit is derived primarily from recruiting others into the scheme, rather than from legitimate product sales
Pyramid selling is a business model where participants earn money primarily by recruiting others into the scheme rather than selling products or services. New recruits often pay a fee to join, and a portion of this fee goes to the person who recruited them, forming a structure resembling a pyramid. This model is usually unsustainable because it relies on constantly adding more participants, and those at the bottom often lose their investment.
- Pyramid selling schemes recruit participants with the promise of earning money by enrolling others into the scheme, rather than selling actual products or services.
- Authorities warn consumers to be cautious of pyramid selling programs, as they are often illegal and unsustainable.
- Unlike legitimate multi-level marketing businesses, pyramid selling primarily relies on continuous recruitment to generate income for its members.
- Participants in pyramid selling schemes often lose money because the structure collapses when recruitment slows down, leaving those at the bottom with no returns.
- Pyramid selling scams can be identified by their focus on recruitment incentives and the lack of a genuine product or service being offered.