Your Future Is At Risk

Is your new business a pyramid scheme?

On Behalf of | Aug 29, 2019 | Federal White Collar Crimes |

Federal white collar crimes come in many forms. One that is important to learn more about is a pyramid scheme. Many people get pyramid schemes and multilevel marketing (MLM) campaigns confused, because they do have some similarities.

In a pyramid scheme, the entire point is to get the victim to give up money. That person is then used to recruit more people who also lose out on their investments. On the other hand, a multilevel marketing company has the main goal of moving product.

What are some easy ways to recognize a pyramid scheme?

There are four things pyramid schemes do to steal your money. These include:

  • Having large start-up costs
  • Placing an emphasis on recruiting new workers rather than selling product
  • Having no interest in the demand of consumers and having done little in the way of market research
  • Having no inventory buy-back policy

There are benefits to MLM companies, but if you accidentally join a pyramid scheme, you could be in dangerous waters. In an MLM, there may be training and support to help you make sales and an income. With a pyramid scheme, you may be left with debt from your start-up costs and little in the way of support to start making back profits.

Multi-level marketing is legal in most of the United States, but pyramid schemes are white-collar crimes that can lead to trouble with the law. If you’re accused in participating in a pyramid scheme, it is very important that you get in touch with your attorney to talk about how you can defend yourself.