Pyramidijärjestelmien

Pyramidijärjestelmien, often translated as pyramid schemes, are a type of fraudulent investment operation. They are characterized by a structure where participants make money primarily by recruiting new members rather than by selling actual products or services of value. The initial investors are promised high returns for bringing in more people, and the money to pay these early investors comes from the fees or investments of later recruits.

The core mechanism of a pyramid scheme involves a hierarchical structure. New participants pay a fee to join, and a portion of this fee is passed up to the person who recruited them, and then to that person's recruiter, and so on, up the pyramid. As the scheme grows, the number of new recruits required to sustain payments to earlier participants increases exponentially. This is unsustainable because eventually, the pool of potential recruits dries up.

When recruitment inevitably slows down, the lower levels of the pyramid are unable to recruit enough new members to cover the payouts promised to those above them. This leads to the collapse of the scheme, with the vast majority of participants losing their entire investment. Regulators worldwide consider pyramid schemes illegal and a form of financial fraud due to their inherent unsustainability and the high likelihood of financial loss for most participants. Distinguishing between a legitimate multi-level marketing (MLM) business and a pyramid scheme is crucial, with the former emphasizing product sales and the latter focusing on recruitment.