I stumbled upon a very strange thing this week when I was traveling for business through a rural part of Ohio …
Setting the Scene:
I had finished work, ate some dinner, and was looking for a place to chill out on my laptop. With limited options, I found a local Tim Horton’s Coffee & Bakery shop and decided to hang out there.
When I entered, the first thing I noticed was the place was packed! “Perhaps this was the happening place to be on a Wednesday night” I thought. So I ordered my coffee, took a seat, and got on my computer.
The majority of the people that were there looked slightly less than well-off. But among them were a few very well (and overly dressed) young women.
Preying Upon the Ignorant:
I got on my phone to have my regular evening call with my wife when suddenly I observed “The Presenter” arriving. He was a young African American male in his 20’s that was also well dressed. He went around the store giving a “Whud up?” and handshake to everyone in attendance (all of which seemed to have been waiting for him to arrive). Everyone seemed glad to see him and he was warmly welcomed. Had I found myself in the middle of some type of cult meeting?
Luckily, since I was on my phone, the group seemed to ignore me (although a few people did motion for me to join them). I smiled and declined. But from afar, I observed.
“The Presenter” whipped out his laptop, thanked everyone for coming, invited them to come close together, and then began his PowerPoint presentation. As the words starting rolling off his tongue about the benefits of “joining his club”, I had finally figured out what was going on:
• This was going to be a sales pitch for some form of a pyramid scheme.
What is a Pyramid Scheme?
For anyone who doesn’t know, a pyramid scheme is a shady business practice where people get rich by recruiting others to sell some crappy product or service. To continue the scheme, the current recruits are given the burden of finding new recruits, and thus with each cycle the pyramid grows. Those who initiate the scheme (at the top of pyramid) usually make all the money while each new set of recruits (those at the bottom of the pyramid) makes less and less.
The problem is that the cycle of recruiting more and more people to grow the pyramid eventually runs out, and usually leaves the suckers at the bottom of the pyramid with lost money. Pyramid schemes are illegal, but they can still lurk in various forms.
How did I know this was a pyramid scheme? By many observations:
• The presentation was about joining a “vacation club”. It started off with lots of fantastic images of tropical beaches and people enjoying vacation.
• To join this club, you had to “get your family and friends” to sign up to use their service.
• A bulk of this presentation centered on “how easy it was to make money from doing this”. The Presenter talked about how he went from working for minimum wage to earning “thousands of dollars” each week. His female peers (the other well dressed individuals) also spoke up about how they went from being poor, single-mothers to independent, strong women! Each one of them also bragged about how they “don’t actually have to go to work since they do this”.
• The presentation concluded with images of rich people like Mark Zuckerberg. “Don’t you want to be rich like this guy?” the Presenter asked.
• Not one mention of actual financial advice like saving your money, budgeting, starting a 401k, etc.
If that didn’t convince you, there was more. After the presentation concluded, the “new recruits” stayed behind for a training session with one of the females. Here were offered the following top-notch advice:
• How to get people to come to these meetings.
• How to get kids out of the meeting so the parents can pay attention and be engaged.
• How to start conversations with random strangers and then invite them to join the group. (Is this why they kept motioning for me to join them?)
• How to boldly introduce yourself and tell your rags-to-riches story.
• How many people you need to recruit to have one of these “special” presentations.
• How to use your female persuasion to get the men interested.
• Again, not one mention of actual financial advice.
It’s Just Not That Easy:
I suppose that it should come as no surprise that people are still desperate enough to buy into this type of get-rich-quick nonsense. After-all, isn’t our society obsessed with finding the quickest, least-effort solution? TV commercials are full of products that promise you to lose weight without exercise or get rock-hard abs.
Unfortunately though, like exercise, it’s impossible to cut corners and short-cut your way to actual results.
People need to understand:
• If it was really “that easy” to make money, then why wouldn’t we all be doing what this person is offering and getting rich?
Whenever someone offers you an idea or inclusion in something that sounds too good to be true, it probably is!
Unless you’ve going to be a true entrepreneur or have a real product or service to sell, then you’re going to have to get rich the old fashioned way: Going to work, saving your money, and investing little by little for the future. Don’t worry … a helpful site like Wealth Pursuits has dozens of examples showing different ways you can do this!
Remember, beware of anyone who tries to sell you on anything that defies your common sense.
Dear Readers – Have you ever been a witness or invited to participate in a pyramid scheme? Has anyone ever promised you riches for taking part in something that sounded too good to be true? How did you know that it was going to be a scam?