Proliferation Of Ponzi/Pyramid Schemes and The Litany of Lamentations: Any Relief In Sight for Victims?

2021 ◽  
Author(s):  
ThankGod Chinonso Ekenobi
Keyword(s):  
Pyramid Schemes

Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes

2002 ◽  
Vol 21 (1) ◽  
pp. 139-151 ◽  
Author(s):  
Peter J. Vander Nat ◽  
William W. Keep
Keyword(s):  
Mathematical Model ◽  
Distribution Channel ◽  
Specific Form ◽  
The Internet ◽  
Key Factors ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
International Growth ◽  
Pyramid Scheme ◽  
Pyramid Schemes

A specific form of direct selling, multilevel marketing (MLM), experienced significant international growth during the 1990s, facilitated in part by the development of the Internet. A corresponding increase in the investigation and prosecution of illegal pyramid schemes occurred during the same period. These parallel activities led to increased uncertainty among marketing managers who used or wished to use the MLM approach. The authors examine similarities between the multilevel approach to marketing and activities associated with illegal pyramid schemes. A mathematical model is used to differentiate between the two on the basis of previous pyramid scheme cases and current U.S. law. The results of the model suggest key factors that marketers interested in MLM will need to consider when developing this type of distribution channel.

Pyramid schemes

Physics World ◽  
2014 ◽  
Vol 27 (08) ◽  
pp. 42-42
Keyword(s):  
Pyramid Schemes

FIELDS OF DREAMS, FIELDS OF SCHEMES: PONZI FINANCE AND MULTI-LEVEL MARKETING IN SOUTH AFRICA

Africa ◽  
2012 ◽  
Vol 82 (1) ◽  
pp. 69-92 ◽  
Author(s):  
Detlev Krige
Keyword(s):  
Cultural Values ◽  
Risk Taking ◽  
Rapid Change ◽  
Marketing Strategies ◽  
New Members ◽  
Work From Home ◽  
Liberal Capitalism ◽  
Multi Level ◽  
Pyramid Schemes ◽  
Social Logics

ABSTRACTThe structural conditions associated with increased inequality amidst rapid change brought about by growing financialization and efforts to get the ‘unbanked’ sections of society into the formal financial system have created the conditions under which illegal pyramid and ponzi schemes, fake investment schemes, and legal multi-level marketing companies have been able to flourish. In contemporary Johannesburg and Soweto the originators of money multiplication schemes and the agents who ‘work’ to recruit new members position themselves in this context as financial entrepreneurs and brokers who embody a range of seemingly contradictory discourses, drawing on discourses of ‘empowerment’, ‘self-help’, ‘entrepreneurship’ and ‘religiously sanctioned wealth and prosperity’ in the course of their risk taking in the field of finance. Based on a series of case studies of female agents of ‘push-push’ schemes, the article shows how many of these discourses reflect some of the conditions of contemporary capitalism: citizens are expected to be active investors, active entrepreneurs and hard workers who are able to work from home and without a boss. Moreover, the schemes use sophisticated technologies, marketing strategies and other practices which simulate formality, legality and sincerity – echoing religious practices and discourses. At the same time a set of cultural values and social logics that are not necessarily produced by neo-liberal capitalism and financialization, but are certainly activated by them, makes it hard for citizens to recognize or admit the forms of deception involved, unless deception is seen to be central to the operation of the modern state or the present ‘get-rich-quick’ culture. Risk taking, and pursuit of social mobility, originate in dual economy legacies, with their unfulfilled expectations, wealth disparities and frustrated class aspiration. Participants in pyramid schemes have ideologies combining ‘progress’ with ‘imminent doom’, entrepreneurship with greed: contradictory attitudes reflective of financialization in the broader world.

Pyramids, Ponzis and fraud prevention: lessons from a case study

2018 ◽  
Vol 25 (1) ◽  
pp. 81-94 ◽  
Author(s):  
Stacie Bosley ◽  
Maggie Knorr
Keyword(s):  
Religious Communities ◽  
Collective Knowledge ◽  
Content Type ◽  
Scarce Resources ◽  
Age Cohorts ◽  
Level Data ◽  
Pyramid Scheme ◽  
Affinity Groups ◽  
Pyramid Schemes

Purpose This paper aims to empirically identify factors that increase consumer vulnerability to pyramid scheme fraud and compares/contrasts dynamics and implications of pyramid and Ponzi fraud. Design/methodology/approach Statistical techniques, including multiple regression, are used to analyze participant data (with over half a million individuals) from a now-defunct US-based pyramid scheme, Fortune Hi-Tech Marketing. Findings Findings suggest that this pyramid scheme flourished in counties with identifiable affinity groups: religious communities, Hispanic populations and certain age cohorts (e.g. recently retired). Recruitment success varied significantly between geographic regions, with the highest levels of recruitment in the South. While prior research finds a possible positive relationship between education and Ponzi participation, this is not the case in the pyramid scheme studied. Furthermore, while Ponzi schemes might be pro-cyclical, collapsing during contractions when participants seek to extract their money, this pyramid scheme exhibited counter-cyclical behavior. Practical implications State and federal regulators, as well as consumer protection advocates, should learn from analysis of past pyramid scheme cases. Such analysis informs allocation of scarce resources and supports the case for targeted, active education. Clarifying differences between Ponzi and pyramid fraud helps to support clear and effective intervention. Originality/value This is the first research to analyze national participant-level data from a pyramid scheme to inform future action. While it confirms some past findings, such as the connection to affinity fraud, it adds to collective knowledge on pyramid schemes and the differences between pyramid and Ponzi fraud.

Multilevel marketing and pyramid schemes in the United States

2014 ◽  
Vol 6 (2) ◽  
pp. 188-210 ◽  
Author(s):  
William W. Keep ◽  
Peter J. Vander Nat
Keyword(s):  
The United States ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
Content Type ◽  
Legal Decisions ◽  
Customer Base ◽  
Pyramid Scheme ◽  
The Usa ◽  
External Customer ◽  
Pyramid Schemes

Purpose – This paper aims to analyze the evolution of direct selling – a retail channel that successfully sold products ranging from cosmetics to radios to automobiles – to multilevel marketing (MLM), an industry now apparently heavily reliant on selling to itself. As the courts have found some MLM companies to be pyramid schemes, the analysis includes the overlap between the legal MLM model and an illegal pyramid scheme. Design/methodology/approach – The development of direct selling in the USA was examined, followed by the factors contributing to the design and growth of the MLM model and its non-commission-based compensation structure. Then, the key legal decisions regarding illegal pyramid schemes operating under the guise of MLM, the relative stagnation of direct selling and the state of the MLM industry were examined. Findings – As the MLM model operates on the dual premise of retailing through a network of distributors and recruiting new distributors to do the same, it was found that federal regulators and the courts consistently focus on the “retail question” – the existence and extent of sales to consumers external to the distributor network. The authors argue that without a significant external customer base, internal consumption by an ever-churning base of participants resembles neither employee purchases nor a buying club. Social implications – As the MLM model facilitated the growth of pyramid scheme fraud, creating victims rather than customers, this research highlights successful efforts to regulate this type of consumer fraud. Originality/value – Few papers have been written on MLM and pyramids schemes, and none thus far has taken an historical perspective.

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