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Have you ever been on LinkedIn, Facebook, or looking for a job, basically minding your own business, and all of a sudden, you receive a private message saying: “Hello. I just saw your profile/application, and I think you’re the person I’m looking for. Are you open to new opportunities and ideas?” If so, congratulations. You are being recruited for a pyramid scheme (or a scheme of sorts).
It can happen in several different ways: sometimes it’s that high school colleague you haven’t seen for years. He just sent you a message, and you naively think it’s okay to answer because he’s trying to catch up with you, ignoring that little warning voice in your head. And then – bam! You find yourself in a 25 minutes long pitch about another pyramid scheme for some unknown company, because he won’t reveal its name until you have an online or physical meeting where he will walk you through the details. Old friends are great, indeed. They send you a message to either ask for your help to move out or recruit you to a pyramid scheme.
Other times happen when you have a profile on LinkedIn, a serious social network, and someone DMs you with an opportunity. In the first two times, you think it’s something significant and real, but now you just assume it’s another pyramid scheme and don’t get your hopes up.
The third possibility of facing an invitation for these snake oil sales is the worst. It happens when they invite you to an interview in their offices, and you take the time of that extremely stressful situation of looking for a job to actually go there, thinking you just scored a nice chance to work at a trustworthy company (lol, right?). Once you arrive, something feels off: everyone is wearing nice clothes and using buzzwords in their discourses. Suddenly, you know what it is. “Be your own boss! Make 10k on the second month!” Right. You ask them if this isn’t a pyramid scheme, and someone with a lot of gel in his/her hair and super white teeth laughs and says: “Every business is structured like a pyramid!” Time to hit the road, Jack.
MLM versus Pyramid Scheme. What’s the difference?
That being said, these three “techniques” to sell snake oil have one thing in common: they are all bullshit.
Investopedia defines Multi-level Marketing as “a strategy that some direct sales companies use to encourage their existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales. The recruits are known as a distributor’s downline. All distributors also make money through direct sales of products to customers”. You may know it by the names Avon, Tupperware, MaryKay, etc.
Although seen as a lawful business, the truth is that there is no such thing as easy money. Not even selling drugs is an easy way to make money. MLM promises you big commissions and quick cash but fails to tell you will only receive X percentage of that commission, and you will lose every single friend you have because you can’t go out with them without trying to sell them the latest Avon lipstick. You will also lose your girlfriend when she finds out that same lipstick on your pocket, and you won’t admit you’re reselling Avon products.
Pyramid schemes are a different kind of shenanigans. According to Investopedia again, “a pyramid scheme is an illegal investment scam based on a hierarchical setup of network marketing (…) New recruits make up the base of the pyramid and provide the funding, or so-called returns, in the form of new money outlays to the earlier investors/recruits structured above them in the scheme. A pyramid scheme does not usually involve the selling of products. Rather, it relies on the constant inflow of money from additional investors that works its way to the top of the pyramid.”
The big difference between the two is that, whereas MLM is legal and can be somewhat dignified because your source of income is making money primarily from selling real products, with pyramid schemes – an illegal form of business – you only gain money by recruiting others to the so-called entrepreneurship and the only one compensated with participation and recruitment fees are the ones at the top of the pyramid.
Despite all of them being a shoot in the foot, Multi-level Marketing is the least evil one and some governments, like the USA, even accept it as a legit business. According to the Direct Selling Association, it had approximately $33.7 billion in annual sales in 2013, with about 16.8 million people involved in direct selling. At least, it is more a real job than being an influencer because you actually do something.
My story with these swindles
As a Millennial and part of Generation Z, I belong to the two most educated and well-prepared generation of all times (or so it seems). We finished high school; went to college or learned technical skills; we are techy-savvy and pragmatic; have bachelor’s degrees, master’s degrees, postgraduate studies, and work experience. Yet, we are constantly bombarded on LinkedIn and job sites with “opportunities” for pyramid schemes. When we walk down the street, we don’t fear a Pennywise situation with sewers: we fear someone will corner us and try to recruit us to one of these schemes.
Although we have all these qualifications, we still get these messages on LinkedIn and other social media.
Snake oil seller: Hello! I have been developing a project for a few months now, and I’m doing a profile search. Do you consider yourself a person open to new ideas and opportunities?
You: Hi! Thank you for reaching out. Yes, I consider myself a person open to new ideas and opportunities. Can you give more details about the project? What company are you representing?
Snake oil seller: Of course! That is precisely what I want to explain to you. Can we schedule a call later today?
You: Can you tell me first which company you are representing?
Snake oil seller: I prefer to tell you those details on the call, okay?
I wish everyone would treat me as nicely as these people when they are trying to recruit someone. The thing is: it’s all a facade. When I was looking for a job more than a year ago, I was caught in not one, not two, but three physical interviews for a pyramid scheme (at this point, I was being misled because I allowed it, to be honest). In the fourth time, I recognized the logo in their office and said to them I would not be attending the interview because I was looking for a job and not a pyramid scheme. Better luck necks times, you vampires.
Besides all this trouble, I was also approached three times, by three different people, on LinkedIn to become part of a pyramid scheme called MyWorld. The first time, I actually was dumb enough to engage in a Whatsapp call with a guy, where he talked and talked for 15 long minutes and said nothing useful, and then proceeded to show me a ten minutes video about the “company.” In that video, it was shown how I would make 10k in a few months if I were willing to pay 2k for study material and recruit more people. Thank you, but I can’t. I had my stupidity amputated last week.
How to recognize a pyramid scheme
So that you don’t fall for these schemes as much as me, here are some tips to quickly identify a pyramid scheme on the spot:
- The people trying to recruit you refuse to give basic details about the “job opportunity,” like the company’s name or the exact function.
- They evade your questions and insist on scheduling a call or meeting.
- The people trying to recruit you are overly and somewhat awkwardly nice.
- The income you may receive is mainly based on the number of people you recruit and the money they pay to join the company.
- People claim rags-to-riches stories and lavish lifestyles made possible by being in the company.
- You are required to pay up-front or buy something to start working for the company.
- They promise you will transform your expenses into profit and double it in a short period.
- “It’s not a pyramid scheme,” they say.
- They talk, and talk, and talk, and you don’t understand what you will be doing – it’s all abstract and evasive.
- You question them if that is a pyramid scheme, and they: a) deny it; b) stop answering altogether.
If you are working in Portugal and/or looking for a job, you can consult here and here companies known for that type of illegal activities and how to stay away from them like the plague (or Covid-19).
Being scammed into one of these sucks, but at least now you have a new weapon to keep away people who are bothering you. Just say/write: “Do you want to be your own boss and make tons of money? Just…” Bam. Problem solved.