Are you offered to invest money at incredibly high interest rates, promise a guaranteed income and ask you to actively involve friends in the project? Be careful, a successful investment company can be a pyramid scheme. We will tell you how such organizations operate and how to recognize them.
What is a pyramid scheme?
A pyramid scheme is a fraudulent project that simulates a profitable investment. Funds come from the constant attraction of new members. They deposit money, then attract new people - the pyramid grows. In this case, the top of the pyramid can really work. And the lower classes do not get anything - they naively donated their money to those who are one step higher.
This classic scheme of "the tops cheering, the lows in flight" was relevant 20 years ago. If someone tells you that in the 90s he hit the jackpot in the pyramid, maybe it was - he did not lie, but he ripped it off. But this is not a reason to repeat his feat - in our time, such schemes do not work. The rules have changed. Remember: you cannot make money on financial pyramids today.
Modern pyramids act rapidly: aggressive advertising, collecting money from those who believe in miracles (or freebies), and that's it ... that's it. The organizers are hiding with the money of the deceived investors in order to open another investment project in a new place. Until they go to jail.
The number of financial pyramids changes from year to year, but they do not disappear at all: some are closed, new ones are opened. And, according to the Bank of Russia and law enforcement agencies, every year people lose billions of rubles in them.
Types of financial pyramids
The financial pyramid as it is
Sometimes the organizers of the pyramid do not hide its essence. They very convincingly explain the mechanism of action and demonstrate logical calculations. The arguments are about the following: due to the Internet, many channels have appeared to attract new partners, today this business is even more successful than in the 90s, thanks to the virtual space. Just be one of the first to join the pyramid and you can make millions.
The pyramid as a super profitable investment
Not all scammers (that's why they are scammers) honestly call their activities a financial pyramid. They often position themselves as an investment venture. They come up with loud and attractive names: a promising business, a high-tech company, an innovative project. They offer to buy stocks and bonds, cryptocurrency and real estate, they promise to invest in super-profitable construction and agriculture, gold mining or IT startups. They are agitating to invest in super-efficient production (although it is not entirely clear in which one) - there are many options. My head is spinning from the prospects of cooperation with such successful people.
Pyramid as something else
Fraudsters are inventive, they disguise themselves as other forms of organization: management companies, consumer cooperatives, bookmakers. They do not always promise exactly cash payments. For example, you may be offered to take a cruise at half price, get cashback for buying gold jewelry, or even repay a loan for you if you bring other debtors to them.
More and more pyramids exist only in the form of Internet projects, but some combine active promotion on the Internet and personal communication with potential contributors. Pyramid builders can lure with bright advertising, splurge in beautiful offices, lure into thematic groups on social networks.
Sometimes it is not so easy to understand that you are facing a real company or a financial bubble.
How to recognize a pyramid scheme?
There are several signs to help you figure out the pyramid builders:
Guaranteed high income without any risk
The organization is heavily advertised and publicly promises unheard-of returns, well above market levels. In the financial market, such statements are prohibited. At the same time, the income accrual scheme is often very complex and indistinct. For the calculation, you are offered a huge formula with many unknowns - just to confuse you. You are assured that there are no risks. But this does not happen: any investment can result in losses.
Asking to bring new clients
For each attracted investor, they promise to accrue a percentage of their contribution. So the criminals are trying to quickly involve as many people as possible in their scam, collect money from them and hide.
No proof of investment
You are shown only beautiful presentations and are not allowed to look at financial documents. The money is offered to be sent not to the details specified in the agreement with the company, but to the account of another legal entity. Sometimes they ask to make a transfer to a bank card or to a person's phone number, to top up someone else's electronic or crypto wallet. Or they offer to deposit in cash, while they do not issue any checks or receipts. As a result, you will not be able to prove that you made any investments at all.
There are no contacts on the company's website
No phone numbers, no email, no postal address. You can only order a call back, chat with the operator in a chat or messenger. Only scammers hide their contact information. In case of problems, neither you nor the police simply can find the cheaters.
If you find at least one of these signs, you should seriously think about who is really in front of you.
How to avoid falling into a financial pyramid?
Before you trust a company with your money, you need to check it carefully.
It happens that even cautious people find themselves involved in a dubious project. How to act in such cases, read the text "What to do if you become a victim of a financial pyramid".
What is a pyramid scheme?
A pyramid scheme is a fraudulent project that simulates a profitable investment. Funds come from the constant attraction of new members. They deposit money, then attract new people - the pyramid grows. In this case, the top of the pyramid can really work. And the lower classes do not get anything - they naively donated their money to those who are one step higher.
This classic scheme of "the tops cheering, the lows in flight" was relevant 20 years ago. If someone tells you that in the 90s he hit the jackpot in the pyramid, maybe it was - he did not lie, but he ripped it off. But this is not a reason to repeat his feat - in our time, such schemes do not work. The rules have changed. Remember: you cannot make money on financial pyramids today.
Modern pyramids act rapidly: aggressive advertising, collecting money from those who believe in miracles (or freebies), and that's it ... that's it. The organizers are hiding with the money of the deceived investors in order to open another investment project in a new place. Until they go to jail.
The number of financial pyramids changes from year to year, but they do not disappear at all: some are closed, new ones are opened. And, according to the Bank of Russia and law enforcement agencies, every year people lose billions of rubles in them.
Types of financial pyramids
The financial pyramid as it is
Sometimes the organizers of the pyramid do not hide its essence. They very convincingly explain the mechanism of action and demonstrate logical calculations. The arguments are about the following: due to the Internet, many channels have appeared to attract new partners, today this business is even more successful than in the 90s, thanks to the virtual space. Just be one of the first to join the pyramid and you can make millions.
The pyramid as a super profitable investment
Not all scammers (that's why they are scammers) honestly call their activities a financial pyramid. They often position themselves as an investment venture. They come up with loud and attractive names: a promising business, a high-tech company, an innovative project. They offer to buy stocks and bonds, cryptocurrency and real estate, they promise to invest in super-profitable construction and agriculture, gold mining or IT startups. They are agitating to invest in super-efficient production (although it is not entirely clear in which one) - there are many options. My head is spinning from the prospects of cooperation with such successful people.
Pyramid as something else
Fraudsters are inventive, they disguise themselves as other forms of organization: management companies, consumer cooperatives, bookmakers. They do not always promise exactly cash payments. For example, you may be offered to take a cruise at half price, get cashback for buying gold jewelry, or even repay a loan for you if you bring other debtors to them.
More and more pyramids exist only in the form of Internet projects, but some combine active promotion on the Internet and personal communication with potential contributors. Pyramid builders can lure with bright advertising, splurge in beautiful offices, lure into thematic groups on social networks.
Sometimes it is not so easy to understand that you are facing a real company or a financial bubble.
How to recognize a pyramid scheme?
There are several signs to help you figure out the pyramid builders:
Guaranteed high income without any risk
The organization is heavily advertised and publicly promises unheard-of returns, well above market levels. In the financial market, such statements are prohibited. At the same time, the income accrual scheme is often very complex and indistinct. For the calculation, you are offered a huge formula with many unknowns - just to confuse you. You are assured that there are no risks. But this does not happen: any investment can result in losses.
Asking to bring new clients
For each attracted investor, they promise to accrue a percentage of their contribution. So the criminals are trying to quickly involve as many people as possible in their scam, collect money from them and hide.
No proof of investment
You are shown only beautiful presentations and are not allowed to look at financial documents. The money is offered to be sent not to the details specified in the agreement with the company, but to the account of another legal entity. Sometimes they ask to make a transfer to a bank card or to a person's phone number, to top up someone else's electronic or crypto wallet. Or they offer to deposit in cash, while they do not issue any checks or receipts. As a result, you will not be able to prove that you made any investments at all.
There are no contacts on the company's website
No phone numbers, no email, no postal address. You can only order a call back, chat with the operator in a chat or messenger. Only scammers hide their contact information. In case of problems, neither you nor the police simply can find the cheaters.
If you find at least one of these signs, you should seriously think about who is really in front of you.
How to avoid falling into a financial pyramid?
Before you trust a company with your money, you need to check it carefully.
- Find a company in the registries of legal financial institutions. In most cases, companies must have permission from the Bank to attract investors. And this will ensure that the regulator is monitoring the work of the organization. But some entrepreneurs raise money from investors through crowdfunding, issue their securities and sell them outside the exchange. In this case, they do not need permission from the Bank to search for investors. Then the absence of a regulator in the registers does not mean that you are dealing with fraudsters. But your risks of losing your savings if you invest in a project increase many times over - after all, the Bank does not control the work of such organizations.
- Check the data in the state register of legal entities. Study information about the company on the website of the Federal Tax Service (FTS). Perhaps the company was registered recently - almost on the eve of fundraising, it has a minimum authorized capital and a single founder. Then you are at great risk, entrusting her with your savings. Pay attention to the main activity of the organization. If it is registered as a bakery and offers investments in cryptocurrency, only the income of its creators will grow by leaps and bounds, and you will lose money.
- Read reviews on the internet. A lot of the same type of praise? They may turn out to be fake.
- Examine the documents. First of all, check the full name and details of the company - what is indicated in the agreement, on the organization's website, in the registers of the Bank and the Federal Tax Service. Even minimal differences may indicate that they are trying to deceive you. Read what obligations the company undertakes and what will happen if it does not fulfill them. Perhaps already at this stage it will become clear that it is not worth doing business with the company.
It happens that even cautious people find themselves involved in a dubious project. How to act in such cases, read the text "What to do if you become a victim of a financial pyramid".
