• Pyramid scheme funnels revenues from all recruited members from lower levels of the organization to members at higher levels.

  • In the US, recruiting members of financial pyramid schemes is a criminal offense.
  • Pyramid schemes are based on income from employment fees, and not, as participants may believe, from the sale of real goods or services with real value.
  • Multilevel marketing (MLM) operations are legitimate business programs in which distributors earn money from the sale of tangible goods and from commissions on purchases and sales of distributors they employ.
  • Pyramid schemes are often masqueraded as MLMs, but their focus is on rewards from recruits rather than revenue from product sales.