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Is My Friend Involved in a Pyramid Scheme?

Ask Savvy: Help! My Friend Is Involved in a Pyramid Scheme

Dear Savvy,

I have a friend who just "invested" into this MTM (like Amway) business. He's been posting about it all over Facebook and trying to convince his friends and family to join. He claims that it's legit and "it's early on, so you're guaranteed to make money." I am pretty disgusted by it, and I am afraid he's going to lose a bunch of money, not to mention the respect of his friends! What do I say when he asks me to join? How do I explain to him that it's not a good idea? Should I even say anything at all?

Savvy says: The so-called business opportunity your friend has signed up for is a multilevel marketing set up, otherwise known as a pyramid scheme. You're right to be concerned about where his involvement may lead him. To see the rest of my answer, just


These schemes loop people in by presenting a too-good-to-be-true scenario in which you're "guaranteed to make money." Of course, nothing is that simple. In the pursuit of money, people like your friend are roped into thinking they'll strike gold by putting in very little time and effort. They're told the more friends and family members they can recruit into the business, the more money they'll make because they are to receive a percentage of whatever sales are made by their personal pyramid.

Dateline investigated a company called Quixtar, which they compare to Amway and mention the latter came under government scrutiny for making false promises to its distributors. The exposé breaks the scam down like this: High-level distributors claim they've struck it rich by selling the company's products, but their income is really coming from the books, tapes, and seminars they sell as requirements to succeeding in the business. The rest of the distributors, like your friend, don't have access to selling those materials but shell out a lot of money to buy them.

When your friend approaches you, politely decline and say you don't feel comfortable with the idea. Do some research on the company — you may discover with a simple Internet search that formal complaints have been made against the business. Gently notify your friend of the allegations made against the company or companies like it, express your concern for the losses he could experience, and hope that he listens.


traviesa53 traviesa53 7 years
Well i havea a diffeerent opinion..of couse it takes time and its hard but you can accomplish everything you want in life. Amway is not a scheme pyramid, its a multilevel business, meaning that you sell and then pass to different levels. All of the products we sell are high qualidy products and also safe to the environment meaning they are recycle. A lot of people are joining this business and let me tell you guys are staying behind. Soccer players, beauty pageants, and more are beign part of this.
LittleMzFit LittleMzFit 8 years
I understand where you are coming from & cannot stand most of those "arrangements." My brother had gotten involved in Amway at one time & it drove me nuts! MLM has gotten a bad rap because of people/companies like this that seek out others for financial gain. Anyone who has truly done their homework knows that pyramid is illegal. There are many reputable companies that are/were defined as multilevel. This is called direct sales. These include Twinlab (how it started), Avon, MaryKay, Pampered Chef, Tupperware, SouthernLiving, and Longaberger. So, please be objective here. There is something to be said about networking, but it must be done with tact & be genuine about the product/service. Obviously, you can tell when someone has $$ signs in their eyes & when they are genuine about what they do. Like IBO said, the company's reputation has a lot to do with it as well.
brilliance13 brilliance13 8 years
hm MarketAmerica?
Spectra Spectra 8 years
My mom works with a woman whose husband is constantly investing in MTM schemes that end up not working. Seriously, it's ALL he does...he doesn't have a real job. He's always getting screwed by the companies, but he's never learned his lesson. He's spent their mortgage payments on them and taken out loans so he can invest more. I think these MTM schemes should be illegal, but I highly doubt they will pass any laws against them anytime soon.
TidalWave TidalWave 8 years
Tell him to get a real job.
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