(Pierre)- Attorney General Larry Long is warning South Dakotans to avoid pyramid schemes that target consumers. Internet pyramid schemes often present themselves as money making opportunities. However, unlike legal, multi-level marketing, these schemes only continue because of the recruitment of new members who carry on with the pyramid. The emphasis of a pyramid scheme is on the sales pitch and recruitment and not the actual sale of retail items. These schemes are also notorious for promising rates of return that are just too good to be true.
“These unsolicited emails promote these programs as legal and legitimate businesses, but the bottom line is that they are still pyramids,” said Long. “While they promise small investments with large returns, most people lose money because they are certain to fail.”
- Be cautious of emails or direct mail that promote internet marketing;
- Avoid any plan that includes commissions for recruiting additional distributors;
- Beware of plans that ask new distributors to purchase expensive products and marketing materials;
- Avoid offers that claim you will make money through new recruits instead of actual retail sales;
- Be cautious if this is promoted as a rush deal. A legitimate business opportunity won’t disappear overnight;
- Beware of references to terms such as matrix, network or gifting. Companies will reference these terms and avoid “pyramid” in their marketing;
- Remember that operating or participating in a pyramid scheme is illegal, and conviction could result in a five year prison sentence and a $5000 fine.
- Check out all offers with the Consumer Protection Division at 800-300-1986 or firstname.lastname@example.org.