How to Spot a Pyramid Scheme Before You Lose Money

Got a text from an old friend saying they found an “easy work-from-home opportunity”? Your gut’s probably right to be suspicious.

Pyramid schemes are essentially reversed: instead of a company selling products to make money, they make money by recruiting you. Here’s what to watch for:

Red flags that should make you run:

1. No real product - They talk endlessly about “income potential” but can’t explain what you’re actually selling. If the “product” sounds fancy but worthless, that’s a sign.

2. Recruitment is the job - You make money mainly by bringing in new people, not by selling anything to actual customers. The emphasis is always on “building your team.”

3. Pay to play - You need to drop cash just to join, buy inventory, or attend seminars. Even “small” fees add up.

4. Money math doesn’t work - They promise crazy returns in weeks. If commissions aren’t coming from real sales to real customers, where’s the cash actually coming from? New recruits’ wallets.

5. Complicated payout structure - You can’t understand how you actually get paid. That’s intentional.

6. Zero proof of retail income - Ask for audited financials showing real customer sales. They’ll dodge the question or say you “don’t understand the business.”

7. High-pressure, low-detail presentations - Lots of hype, vague language like “ground floor opportunity,” and questions get shut down fast.

8. You can’t ask questions - Or when you do, get vague answers wrapped in corporate jargon.

Bottom line: If it feels sketchy, trust that feeling. Legitimate businesses don’t need tricks—they sell stuff people actually want.