Pyramid Scheme
A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered.
Pyramid schemes are illegal in many countries, including the United States, the United Kingdom, France, Germany, Canada, Romania, Colombia, Malaysia, Norway, Bulgaria, Australia, New Zealand, Japan, Nepal, Philippines, South Africa, Sri Lanka, Thailand, Iran, and the People’s Republic of China.
Pyramid schemes exploit greed and gullibility. A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula. The essential idea is that the mark, Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the business expands. In this regard, pyramid schemes bear a strong resemblemce to Ponzi schemes, named after Charles Ponzi.
