Just when you think an old scam has died, it pops up again. The Nigerian oil scam has been around for years, and lots of people have lost a lot of money. The crooks actually use your blank letterhead to complete documents to suck all the money out of your bank account. Pyramid Schemes Pyramid schemes are illegal in most states, plus there are federal laws that protect consumers. Pyramid schemes are advertised in the mail, by telephone, or by the Internet.
Examples are chain letters, airplane clubs, and giving clubs.
A promoter recruits people to join the pyramid. Each new participant recruits others to join the pyramid, and so on and so on. In other words, the people at the bottom of the pyramid pay money to the few people at the top, hoping that they will someday be one of the people at the top. This scheme assumes that there is a never-ending supply of new recruits, willing to pay money into the plan. If new members and their money don't materialize, the participants will lose the money they invested in the plan.