Source: Action Fraud - UK Police
Pyramid scheme fraud involves an unsustainable business which rewards people for enrolling others into a business that offers a non-existent or worthless product.
A fraudster advertises a multi-level investment scheme that offers extraordinary profits for little or no risk.
You’re required to pay a fee to enter the investment scheme.
You’re then required to recruit friends or family members to enter the scheme. If you do this successfully, you’re paid out of their receipts. They are then told to recruit others to keep the chain going.
Your money is not actually invested in any product. Instead, it’s simply passed up the chain of investors. Because pyramid schemes are unauthorised and make no profits, you’re very unlikely to recover any lost investment. While the fraudster at the top will collect most of the profits, those who entered the scheme later end up losing out.
Legitimate trading schemes rely on valuable goods and services, while illegal pyramid schemes focus simply on recruiting more and more investors.
Using hard-sell techniques, fraudsters try to pressure you into making rushed decisions, giving you no time to consider the nature of the investment.
Fraudsters aim to make their business seem legitimate. This means they will often use technical jargon, impressive job titles and mock websites to look credible.
If you have any suspicions about a scheme’s authenticity, you should investigate the company’s status and contact details.