Pyramid or Chain Referral Schemes

A pyramid or chain referral scheme is a marketing program based on convincing people to buy the right to sell others the right to market a particular product or product line. Promoters select a product and sell large or overpriced inventories to «distributors», with the added incentive of allowing the distributors to sell sub-distributorships. The profit is earned primarily through investors enlisting new recruits who in turn enroll more recruits. In order to recoup the initial investment, new recruits are encouraged to sell new distributorships and there is little real concern given to selling the actual product or service to the public.

The attraction of the pyramid scheme is that it offers ah unusually high rate of return on the initial investment. Investors are typically advised that they can get a full return on their money by getting two or more «new» investors to make an investment. The new investors must then get two or more new investors and so it goes, on and on...

Promoters fail to tell or deliberately conceal that profit from this system becomes mathematically impossible for other than the initiators of the scheme. Similar pyramid schemes are also appearing on the Internet.

Phoney Bank Inspector

An unknown person implies that he/she is a bank representative or working with the police to investigate the misappropriation of money at your bank. Your assistance is required to trap a dishonest bank employee. You are asked to visit your bank and withdraw money from your account. The con artist contacts you after the withdrawal, produces phoney identification and takes possession of your money. You are assured that the money will be deposited to your account within a couple of days... The phoney bank inspector and your money then disappear. Your entire savings can be wiped out within minutes.

Boiler Room Operations

Numerous employees are hired by a con-artist as telephone solicitors to sell products or solicit donations for charitable organizations. The products are frequently of questionable value and the charities are fictitious or, they receive little or nothing. These schemes work well, as each victim consumer is taken for only a moderate amount and they do not usually pursue the issue.

However the small-to-moderate individual amounts add up to thousands of dollars for the boiler room operator.

Be prudent and verify the organization or product before making a commitment.