Pyramid schemes - the reality we all need to be aware of - abound online. Sadly, they are a reality that we all need to be aware of. What is even worse is that legitimate businesses that use completely legal methods of peer to peer personal relationship marketing suffer. There is much controversy about what pyramid schemes really are. One thing for sure, a pyramid scheme is something that the Federal Trade Commission (FTC) frowns upon.
OK, so with this said, let's clarify the difference between a pyramid scheme and those other things that people are making money illegally in - especially online. General rule of thumb for a pyramid scheme is this:
1) They do not offer a legitimate product or service, but only a system by which you can participate in to make money.
2) You can buy your way in at the top of the pyramid by just paying more money, and then being about to leap past other participants in the pyramid scheme.
3) You get paid for recruiting and do not derive any income from the actual sale of a product or service.
There is a great deal more information on the subject on the Federal Trade Commission's Website, but in the meantime, here is a video that may help you better understand the confusion about what is and what is NOT a pyramid scheme.
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