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Pyramid Scheme Questions

Pyramid scheme scammers make multi-level marketing sound really promising. Sounds easy to sell products, recruit friends and family and sit back and reap the rewards. However, it’s not as easy as it sounds and often people have invested time and good money just to lose in the end. Below are five of the top pyramid scheme questions that have been answered by Experts.

What is a pyramid scheme?

A pyramid scheme is an act of multi-level marketing plan. The main characteristic of a pyramid scheme is that participants only make money by recruiting more members. The more people recruited, the higher the level you go on the pyramid. However, most of the time, the only way to make money is if you are on the top of the pyramid. In the majority of pyramid schemes, there are products to sell as well, but the products are usually hard to sell. There are many different kinds of pyramid schemes, but the two most basic are product-based and so-called naked pyramid schemes.

Is Melaleuca a pyramid scheme?

Melacluca is a legitimate company that sells numerous products for the home and for personal wellness. However, your success with Melaleuca could depend on your personal capabilities and time and effort you put into the business. This is just one of the few multi-level marketing businesses that are run like a pyramid. Many times the legitimacy can be hard to spot.

Is a pyramid type business or lottery mailing business illegal in California?

Pyramid or lottery based businesses are illegal in the state of California. According to Section 18 USC 1302 prohibits the mailing of materials for lotteries or other randomly based prize schemes. Pyramid schemes are totally different from lotteries. Essentially they are schemes in which payments by later participants are used to pay off the earlier participants. All such schemes eventually collapse due to the inability to recruit enough new participants to keep them going.

If someone is offering a product in return for a cash payment, but is following a pyramid type format, is this legal?

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. It has been known to come under many guises. Pyramid schemes are illegal in many countries, including the United States.

Is it legal to send out letters asking people for a $1 to be put on a mailing list along with a note to be added to their mailing list?

This type of action is normally considered an illegal pyramid scheme or illegal chain letters and may result, as the US Postal service is used, in a person committing federal mail fraud. A pyramid scheme is a scheme that requires others to join it so that money flows in to those already involved. Whether one asks to have their name added or whether one asks others to pay to be on such a list, the basic foundations of a chain letter/pyramid scheme are still in place and it will be illegal the same.

Pyramid schemes scam and pyramid fraud is taking place all over the world with many people trying to find new ways to make money. Before investing your money time and effort into a possible pyramid scheme, ask an Expert for legal insights based on the details of the particular scheme in question.

Ask a Criminal Lawyer

Ely
Ely, Counselor at Law
Category: General
Satisfied Customers: 2456
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
7286322
Type Your Criminal Law Question Here...
characters left:
4 Criminal Lawyers are Online Now

How JustAnswer Works:

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    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
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    Ask follow up questions if you need to.
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Criminal Lawyers are online & ready to help you now

Fran L.
JustAnswer Criminal Law Mentor
Satisfied Customers: 8061
18 yrs of NYC public defense. Extensive arraignment, hearing, trial experience.
Ely
Counselor at Law
Satisfied Customers: 2079
Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
Nate
Lawyer
Satisfied Customers: 1625
Over 10 years of criminal defense practice.

Recent Pyramid Scheme Questions

  • In New York City I was hit by a BB pellet and filed a police

    In New York City I was hit by a BB pellet and filed a police report. Now the court has issued a protection order against the defendant and they have a subpoena for me to testify in front of a grand jury, I'm afraid what can I do.
  • A private school in San Jose, CA, last Thursday disclosed to

    A private school in San Jose, CA, last Thursday disclosed to the 24 families of special needs kids that the school was running out of money due to mis-management. They have told the families if each family does not come up with $5,000 by tomorrow the school will close on 12/29/14. Not all families can afford so other families are going to try and make up the difference. A total of $136,000 has to be raised.
    Is this not extortion or something criminal? To tell people you have to commit X amount of money or we are closing the school immediately when these families have no other place to take their children?
  • Hello, I had a following out with a former employer since

    Hello,
    I had a following out with a former employer since I work for a competing company now. When I worked for the former company we were allowed to buy our items at employee costs. There were no policies in place saying how much we could buy or how little. It was a very "casual" working environment. Now a former coworker told my the former boss is going to try to go after me for embezzlement for reselling what I had purchased. The guy has some major temper issues and he can be pretty scary at times. On top of that, just from how he conducted work when I was there I know he can bend things to get things done the way he wants. From product customs false statements etc.
    Basically now that I work for the competition he is trying to do personal things to stop me. Could the situation above be considered embezzlement? I have credit card receipts showing consistent work purchases twice a month but I don't have the breakdown of the product. What would stop him from just claiming what I was selling was stolen without the breakdown of purchases?
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