Pyramid schemes are scams that need a constant flow of new participants to keep them going. They are marketed as multi-level marketing programs or other types of legitimate businesses. They use new recruits’ "investments" to pay “profits” to those participating longer. Pyramid schemes collapse when they can't recruit enough new participants to pay earlier investors. These scams always fail—it’s mathematically guaranteed. Report Pyramid Schemes Report pyramid schemes to: Your state consumer protection office The Federal Trade Commission How to Protect Yourself Keep these tips in mind to avoid falling for a pyramid scheme: Do Be wary if you have to recruit more participants to increase your profit, or get your investment back. Ask if the company sells non-tangible products and services rather than physical products. Check out the business with the Better Business Bureau, your state attorney general, or state licensing agencies. Ask to see financial statements audited by a certified public accountant (CPA). Find out if the company earns income from selling its products or services to customers, not to its sales team. Be skeptical of success stories and testimonials of fantastic earnings. Don’t Don’t invest until you’ve verified that the business is legitimate. Don’t get involved in businesses that make you recruit new participants. Don’t buy into franchises that promise big or quick profits. Don’t invest in any “opportunity” bearing warning signs of a pyramid scheme.