Making easy money without having to sell any product is a tempting proposition for most people, however, this can be a blow. Popularly known as the financial pyramid, this type of coup has the characteristic of indicating new people to join a group that drives the gains of the participants.
This type of scam is easily observed in social networking groups where a person proposes high earnings in exchange for new leads to the group. Although at first the proposal seems interesting, it must be borne in mind that it is a scam where the participants do not profit and still lose the money invested.
How does this coup work?
This blow is called a financial pyramid for a simple matter, when the group is started by someone, participants are added so that other new participants enter the group, forming a kind of pyramid where the creator of the coup is at the end. The functionality lies in the dynamics behind the entry of each new member, who needs to pay a membership fee to be part of the pyramid.
As each new member joins the group, the investment rate is used to pay the investment and profit of an older member of the pyramid scheme. In this way, there is a turnover where new investors will always invest so that older investors can receive their profits.
However, there is a big problem in this type of operation which is the size and proportion of the pyramid. Each member who joins the group has a responsibility to get a certain amount of new members. Thus, the pyramid is so huge that the members themselves are no longer able to invite new members so that the costs of the investments are paid at a profit, which ends up causing loss of money for many people.
How to identify the financial pyramid?
Although there are many investments that have characteristics similar to the financial pyramid blow, you have to be aware because there are investment modalities that follow serious and competent criteria such as multilevel marketing. Here are some tips to identify if an investment is worth it or if it’s just a scam:
Company that does not provide investment information
This is a great tip both for the financial pyramid scam and for any other financial investment, as investing in a dubious company is the same as depositing a value with no guarantee. In the event of such a scam, companies generally do not provide much information about the investment or how the procedure works. If you come across this situation, be suspicious and look for more information about it.
Fast cash without selling product or service
The illusion of fast and easy money often obfuscates the danger of an investment, as is the case with this blow. The biggest feature of the pyramid is the argument that it is possible to make quick and easy money by simply indicating people. If the company forces you to invite new members to make a profit, be wary as it may be a blow.