7 Alleged Modern Pyramid Schemes

LuLaRoe is just the tip of the pyramid scheme iceberg. Today, we're diving into some of the most prolific scams in modern history. MLMs and Ponzi schemes, oh my!

From BurnLounge to Holiday Magic, the modern world of pyramid schemes is full of sketchy companies trying to take your money. Let's get into it.

[thomasrogers]

When I was living in AZ we got caught up in the advocare MLM. One of our friends was pretty high up in it making something like 6k a month because they'd been in it since 2008 or so, they knew someone who had been a part of it since the 90s who were making 30k a month. We never did that well so we dropped out and cut our losses somewhere south of 400 dollars.

I say were because AdvoCare ended up catching the attention of the federal trade commission and ended up needing to restructure the way that their benefits were paid out. Suddenly overnight nobody was being paid for having down lines and instead they were only being paid on products sold. The end result was that my friend cut ties with AdvoCare almost immediately and bought shares in Tesla. That was 4 years ago now, he's still doing fairly well for himself. No word on his upline that was pulling in 30k a month.

[knupmc]

I'm still confused on how this is any different from a MLM

[XSpImmaLion]

Some decade ago more or less, I went to visit a friend that I hadn't met for a couple of years, and when I got to his home I saw all these bunch of boxes around his porch, piles and piles of it. Initially I thought he was moving or doing some major renovation on the house or something, but those boxes were all too similar to each other and seemed kinda new, so I asked what those were.
Then he started talking about some miracle Japanese mushroom supplement and other products, algae based stuff, all these supposedly natural supplements and whatnot, plus this whole list of medicinal products from some company with Japanese doctors yadda yadda. He had a catalogue and all the stuff. Cancer prevention, cure for all sorts of stomach maladies, reduce cholesterol, blood pressure, prevent cardiac arrest, body cleansing, all natural, all those insane claims you might've seen somewhere before.
I was paying attention but in my head I was just "oh no.... nononononono".

He said he was following a diet program from the company that composed eating only stuff from those boxes, and also selling the products.
I immediately identified it as a pyramid scheme. We have a bunch of those in my country, several of which are still in operation. Pyramid schemes and MLMs I mean.
I wasn't too insistent about it, but just talked things through with him and told him to take care, to do some research on the company. He was already so into it that I just didn't feel I had room to dig too deep into the subject.

This friend was kinda obese and leading a bit of a sedentary lifestyle that was pushing him towards morbidity, so in a sense I just felt a bit glad that he was putting effort into a generally healthier meal, but I could see from a mile away the scam there. He didn't try selling me anything though... perhaps he was already half way realizing he got scammed.
We never talked specifically about that later on, but number one, he never lost any weight from the whole thing, two, I think it was a one deal thing - he bought a whole ton of stuff all at once, and didn't engage with it anymore - I think... but I also think a whole ton of things happened in his life not long after that he had to stop everything he was doing to dedicate to family. Perhaps that was what took him out of it, I'm not sure.
But also it's more like, he already had lost all he could in the scam. Not the type that would borrow money to keep buying from the business, and he was very much not the salesman type. But he was in between jobs, and that's what likely caused him to get into the thing.

Some stuff to note - this friend of mine had a relatively high degree of education, I never imagined someone like him to fall into a pyramid scheme like that. He was my freshman in university.
But I since learned that education has nothing to do with it... people of all levels falls into those traps all the time. And in fact, several MLMs and pyramid schemes targets people on higher education because they are more likely to sustain the thing, keep paying, etc.
The other curious thing - he had a long running problem with his mom, who was a highly religious person, who got scammed by a cult/church to a point when she started selling and giving out stuff from their home like furniture, fridge and whatnot. It kinda ruined the family's finance. They weren't super rich or anything, just a typical middle class family. So he hit some hard times because of this entire case. So, he was well aware of religious scams... but he still got into one commercial scam somehow. :P

The thing that changed his whole life and perhaps was a trigger to stop with the pyramid scheme thing? His mom got super sick and needed constant hospital visits and care. He stopped everything he was doing in life to support her. She recovered for a while, but later on passed away, and then he only had a few years more with his dad before he also passed away suddenly.
I don't live in my hometown anymore, so we don't keep contact anymore, but the last time I met with him was in his dad's funeral. But we talk every once in a while through chat, and it sounds like he's doing well...

Anyways, just a random semi-related story. When the subject is pyramid schemes, it always brings back this memory to me.

[tessat]

Uhg! My parents were introduced to Amway in the '80s and considered it but decided that it wasn't for them. A few years later, someone asked my mom through work if her teenagers babysat. My 3 sisters and I did. One family asked us to babysit for their two kids and I started babysitting for them. One thing that made me uncomfortable was the large nude photo of a woman over the mantle. It wasn't the wife. They also expected me to feed the kids, but they didn't want to provide snacks for the sitter. The parents divorced, the husband moved out, the photo stayed over the mantle....and then they had another baby. Ohhh kay. Whatever. The lady, who had primary custody of the kids, was REALLY into Amway. She tried to recruit my mother, who politely told her that she wasn't interested. The lady also had a problem having cash on hand to PAY ME after she got home. Repeatedly. She and some other couples finally led to my sisters and I to institute a policy that NONE of us would babysit again for anyone unless they had paid up for previous sittings. The lady called my mom to COMPLAIN! She went on and on about how hard her life was and how she really needed a sitter! She also kept pushing my mom about Amway. To her credit, my mother NEVER made us babysit for anyone. She simply connected us with people who wanted a baby sitter. My mom totally backed us up and refused to make us babysit for this lady who promised that she would pay us...eventually. The lady didn't stick to the agreed hours, which is a problem for students who need to go to school the next day. The house was messy and icky. The snacks were poor to nonexistent and SHE DIDN'T FEEL THE NEED TO PAY US ON TIME. On top of that, she kept nagging my mom to sell Amway. We finally dumped her as a client. She kept trying to get my mother to sell Amway for MONTHS after my sisters and I got "too busy" to babysit for her anymore. My polite Southern mother finally had to refuse to take her calls.

[scottnelson]

Nice explanation of pyramid schemes and MLM schemes. I didn't hear Amway mentioned. A friend tried recruiting me into that once and it was obvious right away that it wasn't going to make ME enough money to be worth the bother. But it helped me recognize MLM so that I could reject the concept right away.

[davidrose]

There's a good series that was on Showtime called, "Being a God in Central Florida" which starred Kirsten Dunst and was set in the '80s. The sub (and occasionally primary) plot involved a pyramid scheme company called FAM which I think stood for Founders American. It highlights the excess of those at the top of the tier and the struggles of those at the bottom. Oh, and the company's founder (played by Ted Levine) also sold motivational tapes and held seminars for its' members.

[lukestager]

When she mentioned having to get into a coffin, I couldn't but help think of Dwight wanting Ryan to get in the coffin in the Initiation episode.

[hallbjornthefirebreather]

Only 2 minutes in and im waiting for the "lume model" to show up. A couple friends of mine fell for it a few years back no matter how much I warned them "you're just mad that I'm gonna be making bank while you're stuck being a stupid skeptic" followed by "is there any one on my friends list that can help me? I got scammed for $300"

[lp-xlld]

Once, in New York back around 1983, a relative of mine and I saw a three-card-monte "game" going on and she said "I've got no sympathy for those people whatsoever...they're getting what they deserve, thinking you can get rich quick..." See the parallel?

[IsabelleShae]

Sorry, but imo there's no MLM that isn't a pyramid scheme at this point. Distribution between businesses can be legitimate, but no company claiming "anyone can be their own boss by becoming a distributor" etc. is legitimate. Even if there is no sign up cost, if people are encouraged to buy products to "know the product they're selling, " if the trainings cost money to attend, if the primary way sales are made is through people's acquaintances or social media as opposed to B2B, if they claim financial freedom, if they have both distributors and sell their products in brick and mortar stores, it's still sketchy and please, do not support these companies. You should not have to generate your own lead sources in a legitimate sales position, like as a brand representative etc.! At the very least, what you can ask for and they are required to provide is an income disclosure statement. Any post with claims of making money through an mlm should always include this also. If you want to support local or small businesses, you should know about the production of the product. You shouldn't just buy it because someone you know happens to be a distributor of xyz - the reason they are posting asking for sales on their social media is because they are losing money. I guarantee there is a handcrafted product waiting to be discovered that's made by someone passionate in your community for just about any product an mlm tries to sell. You aren't supporting your community by supporting an mlm. You aren't supporting a small business owner. You are supporting a big corporation with shady business practices taking advantage of people who legitimately are trying to work hard and further themselves.

[JonTheGoose]

$200m in profits, a $2.4m fine. Let me ask y’all who would be willing to chill in a white collar prison for six years and have $198m waiting for you when you get out? ✋

[censusgary]

A Ponzi scheme is a pyramid scheme, but not all pyramid schemes are Ponzi schemes. A pure Ponzi scheme doesn’t involve merchandise other than money.

[DamarisJohnsonnakomiah]

My dad fell victim to Amyway and Excel

[justayoutuber]

So How is a pyramid scheme any different from companies making most of their money of new franchise fees - like Krispy Kreme did? And Subway...

[Lucas-qogo]

vemma came out when I was 19-20 and tons of people in my highschool got heavily involved in it because their headquarters were in my city lol. we were ground zero for that shit

[LittleEdProduction]

Please stop showing off your manta force, I'm struggling with the jealousy.

[roberttolbert]

MLM's suck if you are not selling a product everybody wants.

[Dreska_]

If someone tries to recruit you for something or a business offers you a 'life changing opportunity' or some other nonsense literally just google it.

[ChainsGoldMask]

I hope to see Social Security on the list.

[nippazhobbies]

No mention of SSA or the Federal Reserve.
Makes you wonder where this channel gets its funding?