The CCP has cautioned against deceptive offers promising easy money and quick returns through multi-level marketing (MLM)/pyramid schemes, noting that some businesses and individuals are disseminating misleading advertisements.
Pyramid schemes operate by requiring participants to pay upfront fees for enrollment. Profits are generated through these fees as well as sales of products, with participants earning commissions from enrolling new recruits and their recruits’ sales. However, the primary source of income is often from recruiting new members rather than selling products.
Early participants may experience gains, but later entrants typically lose their investments as the scheme collapses once recruitment slows. Only those at the top benefit, while the majority lose money. These schemes are advertised across various media platforms.
The CCP warns against schemes promising high returns and requiring upfront payments, advising due diligence before investing. This includes verifying company legitimacy, assessing the business model’s sustainability, and seeking expert advice.
