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Pyramid selling
01
a form of multi-level marketing where profit is derived primarily from recruiting others into the scheme, rather than from legitimate product sales
Example
Unlike legitimate multi-level marketing businesses, pyramid selling primarily relies on continuous recruitment to generate income for its members.
Pyramid selling scams can be identified by their focus on recruitment incentives and the lack of a genuine product or service being offered.
Pyramid selling schemes recruit participants with the promise of earning money by enrolling others into the scheme, rather than selling actual products or services.
Participants in pyramid selling schemes often lose money because the structure collapses when recruitment slows down, leaving those at the bottom with no returns.
Authorities warn consumers to be cautious of pyramid selling programs, as they are often illegal and unsustainable.
