In the modern world, the presence of financial pyramids is not a rare or surprising thing. All of them promise investors easy and quick earnings. It sounds really tempting, which is why a huge number of people around the world suffer from such scams every year. If you are stuck in a financial pyramid or have problems with money, you can take out a quick online loan from the reliable and fast Payday Depot. But in order not to fall for the modern methods of scammers, including financial pyramids, you should learn more about what they are and how to identify and avoid them.
What is a financial pyramid?
A financial pyramid is a structure that seeks to make money as quickly as possible by attracting people to its network funds from as many citizens as possible. It produces nothing and does not conduct any real activities, and the organizers receive income from collecting money from the population. At a very early stage, payments to the first investors are actually made. The creators of the pyramid present them as evidence that the organization really makes a profit. When enough participants join the pyramid, the organizers disappear with all the money, and the majority of investors are left with nothing.
Such pyramids are unfortunately widespread throughout the world. With the modern opportunities provided by the Internet, it has become even easier for fraudsters of financial pyramids to deceive the population. In the 21st century, almost every citizen of civilized countries has access to the Internet, so advertisements, brochures, and exciting pop-ups attract everyone’s attention, especially when it comes to making easy money.
How to recognize a financial pyramid?
As long as financial pyramids bring enormous capital to their creators, they will exist and constantly appear in all countries of the world. Fortunately, all financial pyramids work according to the same scheme, so you should learn how to distinguish such scammers and not fall for their schemes. Here are three main signs of a financial pyramid:
- The promise of guaranteed high returns, which is usually accompanied by bright and aggressive advertising. In the current economic situation, any attraction of funds at a rate above 15% per annum, supported by promises of money back, is most likely a reason to be wary. Do not pay attention to bright advertising on the Internet, social networks, signs, or brochures if the interest rate per annum is too attractively high.
- Lack of real economic activity of the company. Pyramids are often disguised as ordinary businesses, so it is difficult for an ordinary citizen to verify whether their activities are true. But keep in mind that it is not profitable for a real business to count on the money of small investors and promise a high-interest rate if you can present your project to the bank and receive a loan at a rate of 15–20% per annum in a shorter period.
- Affiliate programs to attract participants. Beware of structures that aim to quickly attract a large number of people into their network. For example, they can guarantee you an income of 20% per annum, but for every two friends you refer, the rate will increase by 5%. This is a pure example of a financial pyramid scheme that should be avoided.
What should victims of a financial pyramid do?
Unfortunately, there are almost no precedents when deceived investors managed to return the funds invested in the pyramid. The money raised is quickly pumped into the pockets of the organizers and disappears without a trace. If you have been deceived, you can have time to warn other people, and this will be the best thing you can do. In addition, you can contact the police to initiate criminal proceedings, but this does not guarantee a successful result for you and your capital.
