There has been an alarming international trend of Pyramid Schemes and so-called ‘Multi-Level Marketing’ organisations targeting Deaf communities and vulnerable individuals to join exploitative schemes.
So, what is a Pyramid Scheme?
A Pyramid Scheme is a way of making money mainly from enrolling other people onto the scheme rather than selling products or services. It could look like a big-budget company, or like a small group of people inviting you to be involved.
The rules are simple: a person joining up has to make a payment and, in exchange, they can then take a share of the money from every additional member they recruit to join the scheme.
They may have to sell a product or service, like diet foods or make-up, but this is not how the organisation makes most of its money. The organisation makes its money by recruiting as many people as possible and getting them to pay a subscription or buy big quantities of the product.
What’s the problem?
Pyramid Schemes/MLMs often say that it is quick way to earn lots of money, and have very attractive and persuasive adverts and events. However, most people who work for them do not earn any money at all, or lose money. This is because it does not work except for people at the very top of the pyramid.
The problem is that these schemes often work this way:
- One person asks 6 people to pay some money to join the organisation;
- These 6 new members then each need to recruit 6 new members themselves. The organisation then has 36 members;
- These 36 new members then each need to recruit 6 new members themselves. The organisation then has 216 members
Just 9 more steps, then in order for those people to earn any money then they need to recruit more people than live on Earth! Obviously this does not work.
In the UK, Pyramid Schemes are a type of fraud. If you are caught establishing, operating or promoting a Pyramid Scheme you can risk a criminal conviction, fine, or even a prison sentence.
Some companies now call themselves ‘Multi-Level Marketing’ (MLM), but work in the same way. There are many reasons why a company might say they’re an MLM, but this is usually a way to find a legal loophole in countries in which Pyramid Schemes are illegal.
What can I do?
If you or someone you know has been affected by a Pyramid Scheme/MLM:
- Stop any payments to the organisation immediately
- Do not ask any of your family or friends to join – they could also lose money
- If you think someone you know is getting involved in a Pyramid Scheme/MLM, let them know the risks
- Contact Action Fraud on textphone (0300 123 2050) or by using an online form (https://www.actionfraud.police.uk/report-a-fraud-including-online-crime-questions )
- Contact the police non-emergency number in your area.