What is a Pyramid Scheme?

Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. Pyramid Scheme就是我们汉语中说的传销。没有人能从中赚到钱，除了背后的组织者。在《西雅图夜未眠》[文章来源：中国大学在线]电影中Annie的舅舅就是因为这个而被抓了。

There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company's incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company's distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.

Pyramids are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. Yet pyramid is illegal because they inevitably must fall apart. 传销最终都是以失败告终的，因为它不可能永无止境的接收新会员，而一旦计划失败，很多会员，也就是处在金字塔最底层的人就会损失掉很多钱，甚至会是倾家荡产。