Pyramid Schemes and Ponzi Schemes – How to Spot the Red Flags
Pyramid and Ponzi Schemes: Spot the Red Flags Pyramid schemes and Ponzi schemes continue to exploit trust in the world of investments. These scams lure people with promises of high returns and financial freedom, only to leave them with devastating losses. Therefore, understanding how they work and recognizing the warning signs is essential for protecting your money. How Pyramid Schemes and Ponzi Schemes Work Both pyramid schemes and Ponzi schemes rely on a constant influx of new participants to sustain payouts. In a pyramid scheme, earnings come from recruiting others, not selling a product. Ponzi schemes pose as legitimate investments, using new investors’ money to pay earlier ones. Eventually, both collapse when recruitment slows. Red Flag #1: Guaranteed High Returns If an opportunity promises consistent, high returns with no risk, be cautious. Legitimate investments involve uncertainty. Consequently, anyone guaranteeing profits […]
