Pyramid Schemes may involve a structure that is laid out like a pyramid, with one person at the top, two persons on the next level, four on the next and eight on the next. The structure may also be circular with one person at the center, two on the next, four on the next and eight persons on the outer circle. The circular structure is merely a view of a pyramid looking from the top down.

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Pyramid Scheme Defense Considerations

Pyramid selling is illegal because it runs on the basis that participants in the pyramid are required to contribute something of value, usually money, and then by reason of the contributions of other participants they become entitled to something of greater value, usually a larger sum of money. In order for any participant to become entitled to more than was contributed, a larger number of new participants is required. If every person who was approached to participate did, eventually the pyramid would fail. Earlier participants in a pyramid selling scheme are more likely to benefit than later participants.

The effect is that while a few benefit, the majority do not.

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