Pyramid and Matrix Schemes
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Pyramid schemes offer a return on a financial investment based upon the number of new recruits to the scheme. Investors are misled about the likely returns as there are not enough people to support the scheme indefinitely – only the people who set up the scheme are able to make any money.
Matrix schemes are
promoted via websites offering expensive hi-tech gadgets as free gifts in
return for spending £20 or similar on a low-value product such as a
mobile telephone signal booster. Consumers who buy the product join a
waiting list to receive their free gift. The person at the top of the list
gets their free gift only after a prescribed number – sometimes as high
as 100 – of new members join up. In
reality, the majority of those on the list will never receive the
expensive item they expect.
Our
advice:
Don't agree to anything, or
sign anything at high-pressure meetings or seminars, and don't
hand over any money or sign a contract to take part in any
multi-level marketing plan until you've investigated it. Take
independent professional advice.
More advice is available on
the
Office of Fair Trading website.