Old schemes in new wrappers: how not to become a member of the pyramid scheme

[Carding Forum]

How to distinguish a financial pyramid and what rules should be followed in order not to accidentally become a brick in it

The success of the pyramids depends on the ability to recruit more and more members.
There is hardly a person in the post-Soviet space who has never heard the abbreviation MMM. As a result of this financial scam, up to 15 million people suffered, dozens of people took their own lives. The damage, according to various estimates, ranges from hundreds of millions to tens of billions of dollars. Times change, but people continue to fall prey to financial pyramids.

So, on August 27 last year, the SBU announced the blocking of a large-scale financial pyramid, in which more than 600 thousand people took part, enriching the organizers by $ 250 million. We are talking about the jewelry company B2B Jewelry. And in mid-March this year, the cyber police exposed a pyramid disguised as an electronics business. Fraudsters attracted money from 55 thousand people who invested UAH 150 million in the project.

In fact, the scheme by which financial pyramids are built has been known since the beginning of the last century. Of course, it could have existed before, but the scam, organized in 1920 by Charles Ponzi, was large enough to go down in history. The Italian did not find any other way to make money in the States than to sell coupons with the promise of 50% profit in 90 days. By July, he was selling securities worth up to $ 250 thousand daily. The "Project" collapsed when the swindler could not pay off the investors who joined later. As it turned out, the company did not produce anything and did not invest anywhere, but paid interest from the proceeds from the sale of new issues of promissory notes.

The "author" of the first financial pyramid is considered to be the Italian Charles Ponzi.
The Ponzi scheme is at the heart of all pyramid schemes. Its essence is that contributions from new investors are used to pay profits to those who joined earlier. The success of the pyramids depends on the ability to recruit more and more members. Since there are a limited number of people in a particular community, all such schemes eventually collapse. As a result, only those few who are at the top of the pyramid manage to make money.
It would seem that the scheme is so simple and straightforward that it is easy to notice and avoid. However, the swindlers cleverly disguise it. Therefore, it does not hurt to arm yourself with certain knowledge before investing money somewhere.

You are most likely dealing with a pyramid if:​

1. The company does not actually sell a single product or service.
2. To participate, you need to make a membership fee. In a typical pyramid scheme, new investors must pay for the right to sell goods or services.
3. You are "guaranteed" sky-high profits. The initiators of B2B Jewelry promised cashback, which was several times higher than the cost of jewelry. In addition, visitors were offered certificates for gold and silver with a yield of up to 416% per year.
4. You cannot receive promised payments or cash out. So, in the case of the aforementioned electronics store, profits from certificates were accrued in local currency, which the organizers of the scheme promised to convert into cryptocurrency. But it was impossible to withdraw virtual earnings.
5. Your income is based mainly on the number of people you recruit, not on selling products to consumers.
6. The firm will not publicize its retail sales. Typically, legitimate companies generate income from the sale of products.
7. Complex commission structure.
8. You are offered to deal with products that are more expensive than similar ones on the market.
9. The company has no customer base.

However, not all pyramid companies are scams. For example, MLM uses a pyramid structure for recruiting to sell products directly to consumers. In this case, the goods are sold through a network of distributors, which resembles a pyramid: each of them recruits and trains sellers and earns commission from them and their sales. But unlike multi-level marketing, in pyramid schemes, product implementation is much less important than recruiting new members, and the goods themselves are much less valuable than membership fees of new members.

How to avoid falling prey to the organizers of the Ponzi scheme​

To avoid getting involved in dubious projects, New York Attorney General Laetitia James advises:

• Collect all information about the company, managers and products or services. Also, get written copies of your marketing plan, contracts, and the like.
• Find out if there is a similar product or service on the market, if there is a demand for them.
• Ask if your unsold products will be redeemed. Legitimate companies buy back at least 80 to 90% of their inventory. Get all promises in writing.
• Resist the temptation to invest just because the people who "recruit" you are friends. Perhaps they were deceived too.

In general, in order to protect yourself from fraudsters, experts recommend following these rules:

1) be skeptical
If someone is trying to attract you with an offer with huge and / or fast returns, with little or no risk, this should be alarming. Be especially careful if income is generated in a way that you have never heard of. For example, they offer to buy seedlings of wonderful plants with the promise of their future redemption with high interest rates.

2) be wary if the offer is unexpected
If someone suddenly contacted you, invited you to an investment seminar, this is a reason to think. Elderly people should be especially careful.

3) check the sales representative
Research a broker or company that offers to become a member of the project. Make sure that the firm is licensed (for example, using the website of the National Securities and Stock Market Commission). Check it out for negative information on Google.

4) try to understand the investment scheme
Never invest in a circuit if you don't fully understand how it works.

 

[pynapple.py]

How to distinguish a financial pyramid and what rules should be followed in order not to accidentally become a brick in it

The success of the pyramids depends on the ability to recruit more and more members.
There is hardly a person in the post-Soviet space who has never heard the abbreviation MMM. As a result of this financial scam, up to 15 million people suffered, dozens of people took their own lives. The damage, according to various estimates, ranges from hundreds of millions to tens of billions of dollars. Times change, but people continue to fall prey to financial pyramids.

So, on August 27 last year, the SBU announced the blocking of a large-scale financial pyramid, in which more than 600 thousand people took part, enriching the organizers by $ 250 million. We are talking about the jewelry company B2B Jewelry. And in mid-March this year, the cyber police exposed a pyramid disguised as an electronics business. Fraudsters attracted money from 55 thousand people who invested UAH 150 million in the project.

In fact, the scheme by which financial pyramids are built has been known since the beginning of the last century. Of course, it could have existed before, but the scam, organized in 1920 by Charles Ponzi, was large enough to go down in history. The Italian did not find any other way to make money in the States than to sell coupons with the promise of 50% profit in 90 days. By July, he was selling securities worth up to $ 250 thousand daily. The "Project" collapsed when the swindler could not pay off the investors who joined later. As it turned out, the company did not produce anything and did not invest anywhere, but paid interest from the proceeds from the sale of new issues of promissory notes.

The "author" of the first financial pyramid is considered to be the Italian Charles Ponzi.
The Ponzi scheme is at the heart of all pyramid schemes. Its essence is that contributions from new investors are used to pay profits to those who joined earlier. The success of the pyramids depends on the ability to recruit more and more members. Since there are a limited number of people in a particular community, all such schemes eventually collapse. As a result, only those few who are at the top of the pyramid manage to make money.
It would seem that the scheme is so simple and straightforward that it is easy to notice and avoid. However, the swindlers cleverly disguise it. Therefore, it does not hurt to arm yourself with certain knowledge before investing money somewhere.

You are most likely dealing with a pyramid if:​

1. The company does not actually sell a single product or service.
2. To participate, you need to make a membership fee. In a typical pyramid scheme, new investors must pay for the right to sell goods or services.
3. You are "guaranteed" sky-high profits. The initiators of B2B Jewelry promised cashback, which was several times higher than the cost of jewelry. In addition, visitors were offered certificates for gold and silver with a yield of up to 416% per year.
4. You cannot receive promised payments or cash out. So, in the case of the aforementioned electronics store, profits from certificates were accrued in local currency, which the organizers of the scheme promised to convert into cryptocurrency. But it was impossible to withdraw virtual earnings.
5. Your income is based mainly on the number of people you recruit, not on selling products to consumers.
6. The firm will not publicize its retail sales. Typically, legitimate companies generate income from the sale of products.
7. Complex commission structure.
8. You are offered to deal with products that are more expensive than similar ones on the market.
9. The company has no customer base.

However, not all pyramid companies are scams. For example, MLM uses a pyramid structure for recruiting to sell products directly to consumers. In this case, the goods are sold through a network of distributors, which resembles a pyramid: each of them recruits and trains sellers and earns commission from them and their sales. But unlike multi-level marketing, in pyramid schemes, product implementation is much less important than recruiting new members, and the goods themselves are much less valuable than membership fees of new members.

How to avoid falling prey to the organizers of the Ponzi scheme​

To avoid getting involved in dubious projects, New York Attorney General Laetitia James advises:

• Collect all information about the company, managers and products or services. Also, get written copies of your marketing plan, contracts, and the like.
• Find out if there is a similar product or service on the market, if there is a demand for them.
• Ask if your unsold products will be redeemed. Legitimate companies buy back at least 80 to 90% of their inventory. Get all promises in writing.
• Resist the temptation to invest just because the people who "recruit" you are friends. Perhaps they were deceived too.

In general, in order to protect yourself from fraudsters, experts recommend following these rules:

1) be skeptical
If someone is trying to attract you with an offer with huge and / or fast returns, with little or no risk, this should be alarming. Be especially careful if income is generated in a way that you have never heard of. For example, they offer to buy seedlings of wonderful plants with the promise of their future redemption with high interest rates.

2) be wary if the offer is unexpected
If someone suddenly contacted you, invited you to an investment seminar, this is a reason to think. Elderly people should be especially careful.

3) check the sales representative
Research a broker or company that offers to become a member of the project. Make sure that the firm is licensed (for example, using the website of the National Securities and Stock Market Commission). Check it out for negative information on Google.

4) try to understand the investment scheme
Never invest in a circuit if you don't fully understand how it works.

Another red flag I have noticed is very common in pyramid schemes (aka Multi-level marketing) and that is the use of very proprietary terminology to describe what is essentially commonplace or mundane at any legit company. For example one pyramid scheme called "ACN" which managed to soak an acquaintance of mine for several grand (despite my repeatedly explaining to him it was a scam). These guys have their own unnecessarily technical or convoluted terminology for everything, so where in a normal company you'd be called a contractor or sales rep or something relevent to the work you actually do, but at ACN they prey on the dreams of most working class people to be self employed and call the people who they dupe "IBO's or Independent Business Owners.
Obviously the term is entirely inaccurate because the only thing they own is a commitment to ACN complete with monthly dues and they couldn't be less independant from ACN as the company expects their "IBOs" to purchase everything from business cards to sales training, web design, media packs and even their own utilities through ACN!
Basically anytime I see a company which has that feel to it of being intentionally convoluted or over complicating the terminology it sets off a red-flag in my head. Also if any of you ever encounter someone from ACN trying to "save you money on your utilities or services" tell them to get fucked, you will have nothing but problems, dirt poor quality and zero customer service.