Pyramid Scheme Warning


It may sound tempting when someone offers you a way to make money by selling and recruiting others to sell the product too.  Watch out though. 

floating money

It may be  an illegal pyramid scheme that will cost you more than you earn.  The Federal Trade Commission (FTC) is using its most recently action to issue a pyramid scheme warning. 

The FTC filed a complaint again Fortune Hi-Tech Marketing, Inc. (FHTM) for allegedly scamming consumers out of $169 million. The FTC alleged that the Kentucky-based company operated an illegal pyramid scheme disguised as a multi-level marketing program. 

Apparently the company claimed anyone who joined could earn a substantial income.  The FTC’s investigation found more than 90% of the members earned less than $15 in a year and most paid more to join FHTM than they earned.

The FTC says, “The company structured its business in a way that guarantees most people who join would lose money. The compensation plan is confusing, and commissions on product sales are very small.

There’s no training on how to sell the products — things you might be familiar with and can buy elsewhere — like subscriptions to DISH Network, cell phone services, or dietary supplements. According to the FTC, the only way to make any money working for FHTM is to recruit other employees.”

Photo by Don Hankins
Photo by Don Hankins

Here’s what you need to know if you consider buying into a multi-level marketing plan

1. Don’t be fooled by claims of people getting rich quick.

2. Don’t be fooled by celebrity endorsements.

3. Do you research before you sign up. Find out what people earn and if they earn it by selling a product or service.

What’s the difference between a multi-level marketing plan and a pyramid scheme.

If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is mainly based on the number of people you recruit and your sales to them, it’s a pyramid scheme.

Published by

Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created ConsumerMojo.com to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.