Pyramid scheme companies have been around for decades, maybe even centuries. People have found ways to exploit others through clever means, and pyramid schemes are no less. The fact that such companies still exist is mind-boggling. What happens in a pyramid scheme is that a few people sitting on top of the ‘pyramid’ start these companies, and heavily incentivize organizers to call upon participants so that the wealth reaches the top. These participants are asked for investments in these schemes and are promised a portion of the entire pool of investments that all the participants who follow put in. Of course, this portion of the pool mostly goes to the people sitting on top of the pyramid, and these people end up being the only ones making profits.
The participants in every case end up losing money. This is due to the fact that when the participants stop signing in, the stream of income stops, and the portion returned is almost always smaller than the initial investment. Similarly, MLMs, or Multi-Level-Marketing Companies, follow the same principles. These companies offer the participants a commission for getting them sales through direct contact with the retailers. Either that or they offer them a portion of the sign-up fee for every member they bring in the company themselves. This unstable way of operating is a major reason why these companies are banned.
Companies You Should Look Out For
There exist a lot of pyramid scheme companies that disguise themselves as ethical and righteous in their proceedings, but that usually isn’t the case. No matter how much they hide their inadequacies, they will float up one day, and we’re here to do just that.
These are the pyramid scheme companies that you should look out for:
- HerbaLife Nutrition
Pyramid Scheme Company #1 Avon
Avon is a multi-billion dollar company and one of the largest makeup retail stores in the world. They follow the multi-level-marketing scheme to advertise their products. Avon has stores worldwide and is home to thousands of employees. To add to that, they also have millions of representatives globally that help them market their products. Avon is actively involved in several laudable causes and programs that make the world a better place. They support breast cancer through donations and raising awareness, and also have spoken out on animal-testing for products.
However, amidst all the morality, Avon might have a blot on their credibility. The beginning of the last decade started off on the wrong foot for them, as several of their executives around the world were charged with corruption and bribery, which led to Avon having to pay hundreds of millions of dollars in settlement fees to the Securities and Exchange Commission. Moreover, they’ve seen several branches close down in countries like France and New Zealand, where the workers have complained about severe misconduct, and how the company didn’t abide by its ethical stance that it usually takes in most procedures. Mistreatment of employees has been well-known amongst Avon now, so we would suggest you to be careful.
Pyramid Scheme Company #2 HerbaLife Nutrition
HerbaLife is a fitness and health well-being company that sells nutritional goods and edibles that help aid weight-loss and muscle gain. However, where they sell products for physical well-being, they haven’t really cared about the well-being of their participants who help them sell their products, as seen by their dealings in the past. HerbaLife has been the recipient of many accusations, many of which were true even if they weren’t deemed as such, because since the beginning, the company has opted to remain not-guilty.
The allegations started in 2004 when a group of more than 8500 distributors accused HerbaLife of operating a pyramid scheme and deceiving its partners into believing that they’d earn significant profits. The company ended up paying a mere 6 million dollar fine and even got to stay not-guilty on the charges from their part. The trend continued in 2011 when the Belgian Commercial Court deemed their company as illegal for being a part of a pyramid scheme. However, these claims were shut down without causing much noise in the marketplace.
Things got more serious though when a venture capitalist also claimed that HerbaLife was basically a pyramid scheme, which eventually led to the Federal Trade Commission exposing hundreds of complaints against the company, and opened an investigation against them.
All the dealings ended up with HerbaLife agreeing to the settlements provided by the Securities and Exchange Commission, paying a hefty fine and pledging to change their business model completely. The FTC had said in its report that it was impossible to make money from HerbaLife products.
Pyramid Scheme Company #3 Amway
Amway, short for American Way, is yet another company that sells beauty and hair products under their company. They too, like the previous two companies, have been involved in wrongdoings in their business across the world.
Amway has been a target for multiple investigations and allegations of being a pyramid scheme business model. It started in the 1970s, where the FTC launched an investigation of the company, which resulted in a 100,000 dollar fine for misrepresenting the income of its employees and distributors. Amway also faced heat in its branch situated in India, where the executives have been charged with corruption and bribery multiple times. Moreover, in 2010, Amway had to pay around 100 million dollars total in fines due to a case filed by the Federal Court. Later on, the company without accepting their actions admitted to having changed their business models in line with the legal settlements.
These are just a few of the pyramid scheme companies that have been heavily accused of being malicious and involved in a pyramid scheme model. They are the worst MLM to join. Although these companies were charged with these cases months or even years ago in some cases, it’s important to know that if they started with a bogus mindset, then there is a good chance that it’ll continue to be present in the future as well. So look out when planning to invest or be involved in these companies!
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