Pyramid schemes fall into the same category in my brain as timeshares and timeshare presentations. You might get suckered into the first meeting by a vague advertisement, but your financial avatar will walk away either exasperated or training for perpetual knife fights.
Pyramid schemes are scams. It’s not a way to make money. It’s not a way to get rich quickly. It’s a way to spend money, prey on friends, baffle me, discourage critical thinking and waste your precious time and brain juice on something that will only serve to enrich someone who is more entrenched in that particular cult than you currently are.
I don’t really differentiate in my head between the multilevel marketing schemes that the Federal Trade Commission recognizes and the ones that are outright and illegal pyramid schemes. The FTC’s website states:
If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme.
Meh. When the only people making a worthwhile hourly wage for their efforts are the ones who are constantly recruiting new members,¹ it’s a pyramid scheme. Maybe you have a product to sell to get over the FTC’s objections, but the real money comes from embiggening the cult. The only way to make money in pyramid schemes is to be an exceptional salesperson. (Hint: you’re probably not exceptional enough). To make a decent hourly wage, you need to not only persuade others to purchase your wares; you also need to persuade others to hawk your wares.
Oh, and these wares that you’re hawking aren’t that great. They’re wildly overpriced to account for the multiple commissions. Plus, you’ll probably need to buy something to get the business started. Maybe you’ll have to buy samples of the product to showcase. Maybe you have to buy brochures and bags for the products. Maybe you have to buy seminars and techniques on how to sell the product. Maybe you have to buy licenses to sell the product. I don’t know. They’re constantly thinking of new ways to part you with your money.
If you are working for a more entrenched company with good name recognition, at least you don’t have to advertise and explain what exactly the crap you’re selling is. These are the schemes that the FTC is okay with for the same reason churches² and tobacco are okay. They’ve been around longer.
Even if you’re just peddling your wildly overpriced crap and not persuading others to join you in selling, well, you’re still peddling your wildly overpriced crap to everyone you meet! It’s hard work to drum up new leads and new sales and new souls to throw your parties. It takes gas and time to sort and deliver the goods that people buy. That’s right. Everyone pays a separate shipping fee on their order, but somehow it all arrives in the same box to you that you have to distribute. You won’t make enough money to justify the work because it’s really a lot of work. Some friends will try to support you and maybe they’ll buy a thing or two a time or two,³ but, eventually you’re just forcing your friends’ financial avatars to knife-fight yours. Don’t make them do that.
Don’t get scammed by these guys in the first place. Use some common sense.
- If the salesman is pushy, it’s probably because his product stinks.
- If he spends most of the time showing you how he folds his hundreds to minimize the bulge in his wallet, he’s playing to your emotions.
- If there’s time pressure to buy, there’s really not.
- If he talks of easy entrepreneurship with the implication that anyone can get rich (and, by extrapolation, it’s your fault when you fail to make what he’s promising you), he’s a jerk with abnormally stubby fingers.
If he insists that you’re getting in on the ground floor of a great opportunity, picture your financial avatar visiting the pyramids in Egypt. You’re on the ground floor and the pyramid is burning. Run! Get out! Now! DON’T arm your financial avatar with a knife and send him to stand at the entrance of the pyramids to lure people into knife fights inside the burning pyramid! Why do I even have to tell you not to do that?! Is this analogy getting too silly? Well, that’s because pyramid schemes are so silly.
- If he uses a lot of abbreviations and fancy-sounding made-up words that you don’t understand, it’s a cult. Cults make up words to distinguish the outsiders. Like timeshare salesmen, they have to use aggressive sales tactics that confuse and wear people down because their products make no sense.
- If you can’t find any negative information on the company online, it’s probably a scam. Everyone has detractors. Even me. I’m not linking to it. No negative reviews means either they’re so brand-new that you’ll be their first victim (yeah, right). Or, more likely, they use the court system to intimidate and purge negative information about them from the web.
- If you don’t understand how you would make money, you’re not ready to buy. Read the fine print. Understand the fine print. Be able to explain the fine print in plain English (or whatever your native language). You should always be able to review the information on your own time to make a decision.
I know this is all common sense and I cannot imagine anyone falling for these schemes. But they’re ubiquitous, so someone must be falling for them somewhere, right? Maybe we just need to keep hearing shit until we get it. To me, putting stuff on credit cards that you don’t need when you don’t have the money for it makes as much sense as paying someone money for the right to buy the license to sell the license to sell a water filter.
Thriftygal’s Review of The King of Queens, Season 2, Episode 22 – “Soft Touch”
*While writing this article, I watched an old episode of The King of Queens that I remembered from years ago. Doug, our titular King of Queens, New York, buys 50 licenses to sell licenses to sell water filters for $1,000 from his neighbor, Walt. Doug’s wife Carrie is skeptical when he tells her of his dealings, but Doug insists that he can make money from this venture and successfully lures his quirky father-in-law, Arthur, to join him. Sadly, Arthur lives in Doug and Carrie’s basement, so he can only voice his support and star in hilarious scenes that chronicle his attempts to sell people a license to sell water filters. My personal favorite:
²Arthur, talking to some missionaries at the door: “You convert to the Sparkle Tap team and I’ll convert to your religion.”
That line alone was worth the price of admission. I laughed out loud. My good man, I laughed out loud.
Doug tries to sell these licenses to sell water filters to his friends, Richie and Spencer. Richie, possibly the only character in the show more conventionally “stupid” than Doug, almost bites in this surprisingly candid scene.³
Richie and Spencer are drinking glasses of water, while Doug tries to rouse their enthusiasm about the product.
Richie: All right, I’ll take a filter.
Spencer: What the hell, I’ll take one too.
Doug: I’m not asking you to just buy a filter. I’m asking you to buy into a way of life.
Richie: I don’t even want the filter.
Predictably, nobody wants to buy the license to sell the license to sell water filters and Doug eventually goes over to confront his evil neighbor. Walt, predictably, has already absconded with Doug’s money. Absurdity taken to extremes, but still, somehow, effective.
My only complaint is this episode lacks character consistency. Spencer explains to Richie succinctly:
“You have a product with little or no value. The only actual profit comes from constantly recruiting new members¹ which you inevitably run out of. And the whole thing collapses.”
I don’t think that Spencer would have been that eloquent in casual conversation. This is the same character who will drive to Vermont to get married so he and his roommate can qualify for a timeshare presentation in a future episode.
*I know the half star is not like the others and I thought about changing my reviews to 3 stars, but it really does deserve that extra half star.