What is Pyramid Scheme?
An illegal model where money comes from recruiting others, not selling real products.
A pyramid scheme makes money by recruiting new participants who pay in, with early members paid from later members' money rather than from real product sales. It mathematically must collapse, because it needs infinite new recruits.
They're illegal in most countries. The tell: your income depends mainly on recruiting people below you, not on selling an actual product to actual customers.
MLMs (multi-level marketing) live in a legal gray zone next door — technically legal if real products are sold, but many function suspiciously close to the pyramid line. This is educational: learn to spot them, don't run them.
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.