Pyramid Scheme

A pyramid scheme is a fraudulent business model that promises high returns on investment through recruiting others into the scheme rather than through actual profits or legitimate business activities. The scheme involves a hierarchical structure where participants at the top recruit new members who are required to make a financial contribution to join. The initial members receive a portion of these contributions as their supposed “returns,” giving the illusion of successful investment. However, as the scheme grows, it becomes unsustainable, as the number of recruits required to sustain returns outweighs the number of potential participants. Eventually, the scheme collapses, leaving the majority of participants at the bottom without any returns and with financial losses. Pyramid schemes are illegal in many countries, as they exploit people’s desire for quick wealth and rely on constant recruitment to survive.