• Latest
  • All
  • How To
New Generation Pyramid Schemes and How Not to Get Sucked In

New Generation Pyramid Schemes and How Not to Get Sucked In

August 29, 2017
POATE 2025

Kenya Strengthens Regional Tourism and Global Reach at POATE 2025

May 28, 2025
sodium-ion battery

Researchers Develop Sodium-Ion Battery That Charges to 80% in 6 Minutes

May 27, 2025
TV Gambling Ads

Regulator Fines Stations Using Religious Shows to Push Gambling

May 27, 2025
Connected Africa Summit 2025

Connected Africa 2025 Day 2: Focus on Digital Inclusion & Cybersecurity

May 27, 2025
DHgate Tablet Cases deals
whatsapp chatbots

WhatsApp iPad App Finally on the Horizon as Meta Teases Launch

May 27, 2025
Connected Africa Summit

ICTA Chair and CEO Push for Digital Unity at Connected Africa Summit

May 27, 2025
Kenya Safaricom share sale

Kenya Plans Mega Sale of Safaricom Shares to Raise Over a Billion Dollars

May 26, 2025
Safaricom, Airtel, Telkom lawsuit

Safaricom, Airtel, Telkom and CA Sued in Data Rollover Lawsuit

May 26, 2025
Metered Internet bill

New Bill Wants to Meter and Monitor How You Use the Internet

May 26, 2025
veo 3

Google’s Veo 3 Is Blurring the Line Between Reality and AI

May 26, 2025
Apple-Glasses

Apple to Reportedly Launch Smart Glasses by 2026 to Rival Meta, Google

May 23, 2025
OpenAI

OpenAI Looks To Get Into Hardware Market After Acquiring Startup For $6.5B

May 23, 2025
Techweez | Tech News, Reviews, Deals, Tips and How To
  • News
  • Entertainment
  • Reviews
  • Features
  • Editorial
No Result
View All Result
Techweez | Tech News, Reviews, Deals, Tips and How To
  • News
  • Entertainment
  • Reviews
  • Features
  • Editorial
No Result
View All Result
Techweez | Tech News, Reviews, Deals, Tips and How To
No Result
View All Result

New Generation Pyramid Schemes and How Not to Get Sucked In

Saruni Maina by Saruni Maina
August 29, 2017
in Editorial
Reading Time: 4 mins read
258
3

When someone promises you a quick and easy way to get money, our natural instinct as human beings is to jump at the opportunity without thinking twice. Pyramid schemes are not a new concept, they have existed for around a century, but do not confuse pyramid schemes and Ponzi schemes.

A Ponzi scheme is one where investors are promised high returns when they invest in a certain non-existent product or service. The schemer sources for new investors to pay off the initial investors just to keep them satisfied. The mastermind will then pack up and leave, having sold nothing but clouds and empty promises.

A pyramid scheme, on the other hand, is where one person recruits other people to participate in a “no-fail investment opportunity”, for example, Public Likes. In Public Likes, one would get a commission on every like their invitee performed but only if that invitee upgrades their account. Let’s say I managed to convince 10 of my friends to join and upgrade their accounts for Ksh.4,500 each, I would get Ksh.1000, daily without doing anything else. For them to recover their “investment” fast enough, they would need to invite more people and convince them to upgrade.

The whole idea seems simple enough but the problem is finding new recruits at each level of the pyramid. Using our above example, the first 10 recruits I made, might each find 10 more people to recruit and upgrade their accounts. This will mean that the platform now has 100 new users who, in turn, will have to find 10 recruits each to make Ksh.1000 daily, in profit. That means they have to collectively find 1,000 people willing to join and if they somehow find 1,000 people, the next level of the pyramid will need to find 10,000 people in order to make a profit.

Eventually, there won’t be enough recruits at the bottom of the pyramid to support the level above it, because, in a Pyramid Scheme, the money earned from new recruits is used to compensate the older ones. That’s when the pyramid topples and everyone at the bottom loses their investment.The first step to avoiding being sucked into a pyramid scheme is to be able to identify one. Generally, Pyramid schemes and online scams that fall under this category have the following characteristics:

The first step to avoiding being sucked into a pyramid scheme is to be able to identify one. Generally, Pyramid schemes and online scams that fall under this category have the following characteristics:

  • Enrollment fees
    Pyramid schemes get their name from the fact that they have a small group of investors at the top that requires a large base to support the scheme, thus the whole thing looks like a pyramid. In a Pyramid scheme, an emphasis is placed on recruiting new members rather than selling products. Same thing with Public Likes, one was lured into a more lucrative earning if they upgraded their account and if they got more people to join.
    If a program focuses on recruiting others to join it’s likely a pyramid scheme. Especially if you will earn more for recruiting others than for actual sales.
  • Confusing compensation plan
    Compensation plans often have provisions involving “breakage”, a period which you do not earn anything because you have not met your targets. Using our example of Public Likes, the breakage period was up to Ksh.2500. This would take you three months if you’re on the basic level, but if you upgrade for Ksh.4500, you earn Ksh.7500 in a month, and you can cash in much faster.
    So, you will have to pay the same company that claims to be paying you just so that you can reach the set targets faster.
  • No genuine product or service is sold
    Is the product or service being sold hard to value? Pyramid Schemes use fancy-sounding products and mostly tech-related services to confuse you as to what exactly is going on. When you analyze what they claim to sell, it does not make financial sense and you will be left with blanks on how they are making money.
  • Promises of high returns in a short time period
    If the company in question is promising to pay you within a short period of time, say weekly, then be on the lookout. There’s a high possibility that they are using the money from new recruits to pay you and not from actual profits made.
  • Easy money or passive income
    You get paid for simply clicking on ads or liking Facebook pages. All these should be signs that you are joining a Pyramid scheme. The most common type of online scam is those that come with the flashy tag, “Work from home and earn $5,000 a month!” Pyramid schemes are so successful because they prey on our desire for quick and easy money.

The truth is, Pyramid schemes are very attractive and people have made money from such schemes, however, it is mathematically impossible for everyone to make money in a pyramid scheme. Pyramid schemes don’t work unless somebody is losing money. According to Pyramid Scheme Alert, 88% of the members in a Pyramid Scheme will be on the bottom level and will lose their money.

In conclusion, Pyramid schemes are illegal because people don’t lose their money due to normal financial and economical forces, but because the system is set up for them to lose so that a few at the top will win.

Tags: Fraud
SendShare146Tweet92
Saruni Maina

Saruni Maina

I Google Bing until it Yahoos! | Email: [email protected]

Related Posts

EFCC Hunts Four Kenyan Nationals in Connection with CBEX Fraud

Nigeria Issues Arrest Warrants for Four Kenyans in CBEX Crypto Fraud

May 6, 2025
digital-fraud-900

New Report Reveals 71% of Kenyans Have Faced Online Fraud

March 25, 2025
How Africa’s Mobile Money Boom Faces Rising Fraud Risks

How Africa’s Mobile Money Boom Faces Rising Fraud Risks

November 4, 2024
Nigerian Fintech Mogul Ordered to Pay $250M for Inflating Financials

Tingo Group Nigerian Founder Hit with $250M Fine For Fraud

September 3, 2024
Ai Vs humanity identity in Africa

AI Unraveling the Identity and Trust Challenge in Africa

January 31, 2024
Crypto King' Sam Bankman-Fried guilty of FTX fraud

“Crypto King” Bankman-Fried Found Guilty – Possible 115-Year Prison Term

November 3, 2023

Latest

POATE 2025

Kenya Strengthens Regional Tourism and Global Reach at POATE 2025

May 28, 2025
sodium-ion battery

Researchers Develop Sodium-Ion Battery That Charges to 80% in 6 Minutes

May 27, 2025
TV Gambling Ads

Regulator Fines Stations Using Religious Shows to Push Gambling

May 27, 2025
Connected Africa Summit 2025

Connected Africa 2025 Day 2: Focus on Digital Inclusion & Cybersecurity

May 27, 2025
whatsapp chatbots

WhatsApp iPad App Finally on the Horizon as Meta Teases Launch

May 27, 2025
Connected Africa Summit

ICTA Chair and CEO Push for Digital Unity at Connected Africa Summit

May 27, 2025

Best devices

budget smartwatches 2025

Best Budget Smartwatches To Buy in Kenya 2025

February 13, 2025

Best Infinix Smartphones To Buy in Kenya 2024

February 13, 2025

Best Laptops for Battery Life in 2024

August 21, 2024

Best “Battery Warrior” Smartphones To Buy in 2024

August 22, 2024

Kenya Strengthens Regional Tourism and Global Reach at POATE 2025

May 28, 2025

Researchers Develop Sodium-Ion Battery That Charges to 80% in 6 Minutes

May 27, 2025

Techweez is a fast growing influential source of technology news, reviews and analysis by leading tech geeks in the industry.

Follow Us

Editorials

Samsung QLED TVs Now Officially Certified for Real Quantum Dot Technology

Trump’s Tariffs Will Be the End of Affordable Tech

5 Ways to Prep Your Tech for Resale

The Weaponization of PDFs: How Cybercriminals Are Exploiting a Trusted Format

Introducing A Brainbox Quiz: Techweez’s Monthly Trivia Night!

5 Most Reliable Virtual Dollar Card Providers in Nigeria

More News

Kenya Plans Mega Sale of Safaricom Shares to Raise Over a Billion Dollars

Safaricom, Airtel, Telkom and CA Sued in Data Rollover Lawsuit

New Bill Wants to Meter and Monitor How You Use the Internet

Google’s Veo 3 Is Blurring the Line Between Reality and AI

Apple to Reportedly Launch Smart Glasses by 2026 to Rival Meta, Google

OpenAI Looks To Get Into Hardware Market After Acquiring Startup For $6.5B

  • Terms Of Use
  • Techweez Brand
  • Privacy & Policy
  • Contact Us

© 2024 Techweez - Palahala Media Group may earn a commission when you buy through links on our sites.
A Palahala Media Group Brand. All rights reserved.
.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

Techweez | Tech News, Reviews, Deals, Tips and How To
Crunchy Cookies 🍪 Ahead!

Hey there! Just a heads-up: we're big fans of cookies - both the digital and edible kind! 🍪 We use our cookies and some from third parties to ensure your browsing experience on our site is smooth sailing and secure.

 

But wait, there's more! We also use cookies to gather stats and insights on how you navigate our site. It's like getting a behind-the-scenes peek at your digital adventures!

 

Don't worry, you're in control. You can adjust your cookie settings anytime to suit your preferences. Feeling curious? Dive into our Privacy Policy for all the juicy details. Happy browsing! 🚀

Functional Always active
Listen, this legal stuff is about as exciting as watching paint dry. But it basically says we only use your stuff for what you asked us to do, and nobody else gets to peek!
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
It's those sneaky cookie crumbs websites leave behind to count visitors, like counting ants at a picnic! Totally harmless, just for fun facts. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
Hey there! Just letting you know we use some fancy gizmos to remember your preferences. This way, we can show you ads that are, well, not completely bananas.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
Make cookies
{title} {title} {title}
Techweez | Tech News, Reviews, Deals, Tips and How To
Crunchy Cookies 🍪 Ahead!
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
Listen, this legal stuff is about as exciting as watching paint dry. But it basically says we only use your stuff for what you asked us to do, and nobody else gets to peek!
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
It's those sneaky cookie crumbs websites leave behind to count visitors, like counting ants at a picnic! Totally harmless, just for fun facts. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
Hey there! Just letting you know we use some fancy gizmos to remember your preferences. This way, we can show you ads that are, well, not completely bananas.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
Make cookies
{title} {title} {title}
No Result
View All Result
  • News
  • Reviews
  • Features
  • Editorial
  • Automotive
  • Entertainment

© 2024 Techweez - Palahala Media Group may earn a commission when you buy through links on our sites.
A Palahala Media Group Brand. All rights reserved.
.