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Category Archives: Scam Alert

How to Avoid a Pyramid Scam

How to Avoid a Pyramid Scam

A challenge to finding a work-at-home opportunity is avoiding scams. One of the most feared swindles is the pyramid scheme. Unfortunately, most people do not know what a pyramid scheme is. As a result, they pass up viable direct sales opportunities they erroneously believe are pyramids, but sometimes get caught up in Internet or “investment” schemes that are illegal pyramids.

So what is a pyramid? First, a pyramid scheme is not defined by its shape. If the shape determined legality of an organization, the government and most businesses would be illegal since the hierarchy is a pyramid. Second, the act of recruiting others into a business opportunity doesn’t automatically mean a business is a pyramid scheme. Instead, a pyramid is a scam that promises monetary benefit without a quality product or service. In an illegal network marketing scam, participants are paid to recruit new members instead of on product sales. This is where things can get confusing. While you can earn income by introducing new business builders into a network marketing company, your income should NOT be based on recruitment. Instead, legitimate income in network marketing is based on you and your team’s product and service sales. Some Internet programs try to get by this rule by having a “membership” program with junk ebooks or services to qualify as products. You can spot these because the focus is on recruiting not on providing a product or service. Be suspicious of any business that focuses on payment per recruit.

Bernie Madoff ran a pyramid scheme in which people thought they were putting their money into legitimate investments; however, Bernie did not invest the money. Instead, he “paid” initial investors with money from newer investors. I had a friend who was invited to an investment “club” whereby he could invest $5000 and the club then would help him find five other people to invest $5000. Essentially the scam promised to net $20,000 from a $5,000 investment. Sometimes these clubs are called “gifting” programs, but regardless of what they’re called, they are illegal because they promise financial gain without a product, service or legitimate investment instrument.

Ultimately, if the only way to make money is by getting others to “join”, then it’s probably a pyramid scheme. But if the income is based on the sale of a product or service, or a legitimate investment tool (i.e. stocks), then it’s probably safe. Before joining any program, do your research. Scammers are clever in their deception and will try to make their scam look legit. So don’t be afraid to investigate, ask questions and seek expert opinions before joining any money-making venture.

About Leslie Truex
Leslie Truex is an ideaphoric writer, speaker, entrepreneur, social worker and mom trying to do it all from the comfort of her home. Since 1998, she's been helping others create careers they love by providing work-at-home information and resources through Work-At-Home Success.
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Note: Work-At-Home Success contains advertising as well as screened work-at-home jobs and resources. Some posts may contain affiliate links, which means I may receive compensation if you register or buy using the link. Occasionally, WAHS publishes "Supporting Contributor" posts or paid reviews for which compensation is paid. These posts are marked as such. All opinions are my own. Click here for full details and disclosures.


Throwback Thursday: Best WAH Content of the Last Week

TBT Best WAH Content

Around the net, Thursdays have been the day to share old photos in what’s known as Throwback Thursdays. I thought I’d adopt that theme and share previously posted content from WAHS and around the web that is still news, noteworthy or important for you to know. So if you missed it, here are some articles you don’t want to miss:

How to Be a Work-At-Home Chat Agent

Make Money On YouTube

Marketing In Minutes

Branding Mistakes to Avoid

Why the Future of Work Is Already Here

15 Legitimate Work-At-Home Careers That You Wouldn’t Expect

About Leslie Truex
Leslie Truex is an ideaphoric writer, speaker, entrepreneur, social worker and mom trying to do it all from the comfort of her home. Since 1998, she's been helping others create careers they love by providing work-at-home information and resources through Work-At-Home Success.
Connect with Leslie: Facebook | Twitter | LinkedIn | Google + | Pinterest
Sign up for the newsletter below to get more great tools and resources.



Note: Work-At-Home Success contains advertising as well as screened work-at-home jobs and resources. Some posts may contain affiliate links, which means I may receive compensation if you register or buy using the link. Occasionally, WAHS publishes "Supporting Contributor" posts or paid reviews for which compensation is paid. These posts are marked as such. All opinions are my own. Click here for full details and disclosures.