It may seem strange to you that unexpected call from a friend or family member whom you had not seen for years or without knowing of his whereabouts. You look at the phone strangely, you answer timidly and in five minutes that person has already presented you with the business of your life that is going to make you “your own boss”. In pyramid schemes, anyone could fall, professional people with stable businesses have been known to go bankrupt as a result of being involved in this.
But what do they consist of?
There are two main pyramid business models, which although similar, are not the same. We refer to ponzi scheme and to multilevel businesses.
The ponzi scheme it is based on a fraudulent investment process in which interest is paid to investors from their own money or with the money of new investors.
The system works as long as the number of “investors” keeps growing, since there is no such investment, but a distribution.
When financing or investment runs out due to lack of new members, the system collapses.
Scheme leads victims to believe profits are from legitimate business activities (e.g. product sales and/or successful investments), unaware that other investors are the source of funds
It is called a Ponzi scheme, because in the 1920s the Italian swindler Carlo Ponzi established a pyramid scheme in the United States where many ended up being scammed.
Carlo Ponzi he carried out this plan and became known throughout the United States due to the enormous amount of money he received.
His original scheme was based on the legitimate arbitrage of international reply coupons for postage stamps, but he soon began siphoning off money from new investors to make payments to previous investors and himself.
Unlike previous similar cases, the Ponzi case garnered considerable press coverage inside and outside the United States; both while it was being perpetrated and after its collapse. This notoriety caused this scheme to eventually bear his name.
MLM Businesses
Multilevel business is a digital marketing and distribution strategy, in which commissions are paid at multiple levels when products or services are sold to the end customer.
It is not exactly illegal, because you are effectively given a product in exchange for your investment, which you sell later at a higher price.
The thing is, you can only get the products through a supplier, and of course, to get ahead you have to recruit or refer other people to be “their own boss” as well.
Main pyramid scams in the DR
One of the most famous was that of the company Telexfreean investment company, based in the United States, which began operations in the Dominican Republic in 2014, swindling nearly 145,000 Dominicans with an amount amounting to RD$4,300,000,000 and another 700,000 people in different countries.
The company sold the activity as a round business, in which from the first week you earned money just by spending a few minutes in front of a computer.
KakaoTalk
Another scam that occurred in 2016 was the Kakao Talk platform, which defrauded hundreds of people through a mobile application that promised to generate profits of up to 200,000 pesos per month.
According to the scammed people, who preferred to remain anonymous, the business consisted of subscribing to the application with their cell phone number through a link provided by an acquaintance.
Once inside, the money was generated by doing the tasks, which consisted of liking and following channels on social media accounts.
Why do people keep falling for scams that have already been discovered?
When some financial advisers were questioned about why people continue to fall for this type of scam, they all agree that the promises of high profits in a short time continue to ensnare no matter how much time passes.
Others indicate that the reason is that we are “beings programmed to trust and because we believe that we are good at recognizing lies”, although this is not the case.
The writer and doctor in developmental psychology Stephen Greenspan, indicates that 40% of those who are scammed do not accept it and only 20% report it to the authorities.
Furthermore, technological development has also made it easier for scammers to reach more victims.
By not knowing who is behind an email, people are more likely to fall for scams, which are even more damaging. On the web, scammers take advantage of everything new: email, digital marketing and social networks.
