Common con tricks

Pyramid schemes

Multilevel marketing scams are also known as Pyramid Schemes. They are occasionally reported in the newspapers, but always after they have collapsed, leaving many people with financial losses.

Pyramid schemes are schemes designed to make money by recruiting people, rather than by selling legitimate products or providing a service. Income comes from the participation fees that the participants are required to pay. The participation fees that these new participants pay give them the “right” to recruit further new participants and receive income. In other words, the only way for a participant to ever recover any money is to convince other people to join and to part with their money as well. In order to secure a stream of money coming into the scheme to be carved up by the establisher of the scheme and its existing participants, the stream of participants needs to go on and on. Early members may get some dividends but when the pyramid crashes, which it will ultimately do, everybody except the person at the top loses.

Advice

• Do not get involved in pyramid schemes, they do not work and you will end up losing money;
• Quick money is not so easy to make;
• Under the new Pyramid Schemes Prohibition Ordinance (Cap. 617), anyone who induce or attempt to induce others to join a pyramid scheme, with knowledge that the benefit they may get are entirely or substantially derived from the introduction of further new participants, will be held criminally liable.
• Be aware if something which sounds too good to be true; and
• Ignore pleas, persuasion and implied threats.