These scams typically ask you to pay a certain amount for a product or "training" so you can sell that product or service for a commission. Usually, this product or service is just about worthless, or deals only with how to recruit more people into the program. Thus, it has no inherent value. Realizing that one person can only sell so much, pyramid schemes ask you to instead recruit others to sell too. You get a commission on not only what you sell, but on what they sell and on what the people they sign up sell and on and on. Thus, your earnings are supposed to increase exponentially and you are supposed to be left filthy rich. Unfortunately, it does not happen because it simply cannot happen that way.
Pyramid schemes ensnare potential investors by promising an exponential increase in profits. After all, if you recruited just two people to a pyramid program and they just recruited two and so on and so forth, you would soon have a large base of commissions. Of course, you may be able to recruit many more than just two people, so two people seems like a conservative estimate. This logic is false, however, because simple math will show that the people necessary to sustain a pyramid become exponentially more at ever level.
Although the first couple of groups may be able to make a profit off the scheme, those near the bottom will have to recruit many more people to recoup their initial investment. This becomes difficult, however, because at some point, the people needed to support a level in the pyramid are more than there are people in the country or in the world. Obviously, it does not matter what your product is, you cannot sell it to more people than there are in the world. Before you reach that point, you will probably reach a saturation point when no more people are interested in what the pyramid has to offer.
There are all types of pyramid schemes, many of which are illegal in Western countries. Pyramid schemes are similar to multilevel marketing, however, which is usually allowed since it is usually legitimate. You may want to research multilevel marketing companies before you invest your time and effort into them, however. Not all pyramid schemes are out to take your money, however. Some simply want to make you believe that you can make money with them.
Certain pay-to-use search engines, for example, have a pyramid based commission schedule. The search engine will pay you a small dividend for using their search engine, but will also pay you a little bit when people you refer use the search engine and when people they refer use it, etc. It is unlikely that you will ever see any real money, but the pyramid pay schedule makes it seem that you can make a good income just by promoting the search engine. Obviously, this is what its owners would like for you to think.
