What is a pyramid scam?

Question

and how does it work?

Answer 1

OK,, here is the deal.. first look on the site from post above.. they are illegal (poor uncle SAM is left out) so that's the reason.. i did one 13 years ago, i didn't know either, the most important key... it has to be a new board, and you better have at least 5 solid people you can bring in under you.for every NEW board you choose to do, MAKE SURE ITS NEW. the people that lose are the late comers w/ no people to bring in.your board will go for how ever long you have new people added on the bottom..

Answer 2

Here's info. on it:

http://www.consumerfraudreporting.org/ML...

....and near the bottom of this link:

http://www.fbi.gov/majcases/fraud/frauds...

...more info.:

http://www.snopes.com/luck/chain.asp

Answer 3

So there's one guy who starts it (selling blenders for example)  He sells a blenders to 10 people.  They each sell to a couple friends and subsequently to other friends etc.  The first guy get a commission from each sale, consistently bringing in money.  These schemes aren't usually successful because the pool of friends usually overlaps and becomes empty.  (aka selling blenders to people who already bought blenders)