fraud prevention
UK Fraud Home About Fraud Types of Fraud Case Studies Fraud Alerts Fraud News Fraud Prevention Fraud Policies Risks of Fraud Reporting Fraud Fraud Related Links
"419" Letters
Advance fee fraud
Corruption
Long firm fraud
Payroll fraud
Pyramid schemes
PYRAMID SCHEMES
A Pyramid Scheme is a plan by which a person gives a consideration (usually money) for the opportunity to receive money that is derived primarily from the introduction of other people to participate in the plan rather than from the sale of a product. The arrangement often operates as an investment and invariably leaves most participants poorer.

In the United States in mid-2001 authorities warned of a new pyramid scheme variation called a "dinner party". Dinner parties are described as a charity group or gifting program aimed to bring women together to find "financial support" and help them make a "positive impact on humanity." But it's actually an old trick reappearing in a new guise, leaving thousands of women feeling duped.

Each dinner party operates as if it were a four-course meal: appetiser, soup and salad, entrée and dessert. Eight "guests" put in $5,000 cash at the appetizer level; all of their money is "gifted" to one woman at the dessert level, who then leaves the pyramid with $40,000. The pyramid then splits into two, and everyone moves up a notch, creating eight new appetizer-level slots in each pyramid to be filled.

The process repeats itself, with the pyramids continuing to multiply in an endless rotation that's referred to as a "perpetual cycle of charitable giving". Warning signs to look out for include:
  • You have to make an investment and then have to recruit others
  • Attempts to conceal the identities of participants
  • Promotion of the pyramid as "approved" or other citations of approval
  • Success stories or testimonials of tremendous payouts
Sponsored by Celare - Information Security Specialists