WHAT IS A PYRAMID SCHEME?

[Music] pyramid schemes rely solely on recruiting members in order to make money the scheme perpetrator uses misleading marketing strategies by posting very high return and advertising it as a quick and easy way to make money here's the initial recruiter at the top of the structure which we'll call a level one and here are two new members who both have to pay the recruiter to get in let's say $100 each this creates a second level within the organization but in order for these members to make a profit or at least to break-even they have to recruit new members to invest which brings us to a third level in our example new members pay a total of $100 $50 of which is paid to their immediate recruiter in level 2 and the other $50 of which is paid to the initial recruiter in level 1 so anytime new members are recruited their investments are divided and distributed to every member on top of them in the organization structure now let's add up all those numbers to see the end results as you can see the members at the bottom lost $100 the members in the middle broke even but didn't make any money and the scheme perpetrator at the top made a nice four hundred dollars at the expense of everyone else in theory everyone can make money as long as they recruit enough people within themselves recruit enough people and on and on where the Earth's population is finite they would be impossible to keep this recruiting process forever and that is why the majority of members ultimately end up losing money in agreement schemes never missing back the money they invested initially [Music] thank you so much for watching if you have any questions that you would like me to answer in the next video please be sure to leave them in the comments below [Music]

Channel: BrainWave

Views: 418,825

Keywords: Pyramid Scheme, Pyramid, Scheme, Fraud, Scam, Money, Explained, Animated, Animations, Companies, Corporations, Drawn, Education, Illegal, How, What, Why, Work, Simple, Knowledge, Documentary

Id: W1Q3Fx9nWOk

Length: 2min 40sec (160 seconds)

Published: Thu Jun 08 2017