Avoid Home Business Scams! Beware of The Pyramid Schemes!

By: Tove Kou


Many websites claim to offer home business opportunities-but many of these so-called home business opportunities are scams. But how do you know the difference? I`ll give some tips for avoiding home business scams.

First off all use common sense. Many scams try to convince you that you will become wealthy with little effort,and you might even see on the website,that this is some "secret" for making money,that is just now being revealed. Much later they reveal this cost for learning the "secret". Before buying this kind of information, take a moment to wonder why it`s being sold. If it`s really that effective,the person selling it should bee wealthy and not need to sell anything!

Some websites promise you to bee wealthy "overnight" - don`t trust it for a second -it`s not realistic you could never get rich that fast unless you "rob a bank"!! Avoiding home business scams means avoiding anything that offers easy wealth. It also means avoiding paying to work for somebody. Don`t accept anything online that makes no sense in the real world.

Beware of the pyramid scheme. The purpose of this article is to help you avoid falling victim to pyramid schemes, whether simple or disguised. Simple pyramid schemes are similar to chain letters, while disguised pyramids are like wolves i sheep`s clothing, hiding their true nature in order to fool potential investors and evade law enforcers.

Thousands of Americans have lost millions of dollars participating in pyramid schemes. Many of the victims knew they were gambling (although they didn`t know the odds were rigged against them). Many others,however, thought they were paying for help in starting a small business of there own. These people were fooled by pyramid schemes disguised to look like legitimate businesses.

What are pyramid schemes? Pyramid schemes are illegal scams in which large numbers of people at the bottom of the pyramid pay money to at few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later.For example, to join, you might have to pay anywhere from a small investment to thousands of dollars.In this example,$1,000 buys a position in one of the boxes on the bottom level. $500 of your money goes to the person at the top of the pyramid,the promoter. If all the boxes on the chart are filled up with participants,the promoter will collect $16,000,and you and the others on the bottom level will each be $1,000 poorer. When the promoter has been paid off,his box or leg is removed and the second level becomes the top of the payoff level. Only then do the two people on the second level begin to profit. To pay off these two,32 empty boxes are added at the bottom,and the research for new participants continues.

Each time a level rises to the top,a new level must be added to the bottom,each one twice as large as the one before.If enough new participants join you and the other 15 players in your level may make it to the top. However,in order for you to collect you payoffs,512 people would have to be recruited,half of them losing $1,000 each. Of course,the pyramid may collapse long before you reach the top. In order for everyone in a pyramid scheme to profit,there would have to be a never ending supply of new participants. In reality,however,the supply of participants is limited, at each new level of participants has less change of recruiting others and a greater chance of losing money.

Things you should know about pyramid schemes.
First: They are losers. Pyramiding is based on simple mathematics:many losers pay a few winners.

Second: They are fraudulent. Participants in a pyramid scheme are,consciously or unconsciously,deceiving those they recruit. Few would pay to join if the diminishing odds were explained to them.

Third: They are illegal. There is a real risk that a pyramid operation will be closed down by law enforcement officials and the participants subject to fines and possible arrest.

Why would anyone pay to join a pyramid scheme? Pyramid promoters are masters of group psychology. They make they schemes look like multilevel marketing methods.Multilevel marketing is a lawful and legitimate business method which uses a network of independent distributors to sell consumer products.

To look like a multilevel marketing company,a pyramid scheme takes on a line of products and claims to be in the business of selling them to consumers. However, little or no effort is made to actually market the products. Instead, money is made in typical pyramid fashion, from recruiting.New distributors are pushed to purchase large and costly amounts of inventory when they sign up.

The best way to avoid a disguised pyramid fraud is to know what to look for in a legitimate income opportunity.

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