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Pyramid Scheme

Pyramid Scheme Definition

Pyramid Scheme is a non-sustainable business model that promises participants payment for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services. New recruits pay an amount of money to join the program and become a distributor of a product or service hoping that they will earn money based on sales or on the number of new recruits they bring in. People hope that the higher up on the pyramid they will be, the more money they will earn. But what happens is that the pyramid scheme collapses and they lose their money. Very often only the originators of the program make money, therefore pyramid schemes are illegal in many countries.

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