How to spot a scam/pyramid scheme:
I have good analogy for a scam or pyramid. I used to play a game called Banjo Tooie on the Nintendo 64, and in that game you had to collect a lot of stuff, and one of these were these cute little colorful things called jinjos, you needed to collate these in order to progress in the game. Once I got to a certain point in the game I came across Minjo’s which are identical to Jinjos expect they attack you and are enemies instead of collectables that help you progress in the game. They even sound exactly like Jinjos and they don’t attack unless you are very close to them. After a few encounters with these Minjos I figured out a way to check whether it was a real Jinjo or a fraud. One way to tell them apart was that usually jinjos are in hard to reach places, while Mijos are easy to find. But the most sure fire way to check if it’s a Minjo or not is to shoot an egg grenade at it. I know, weird, but stay with me. And if nothing happened to it, it’s a Jinjo, because the game won’t let you blow up an item you would need in order to progress. But if it’s a Minjo then it would blow up. In this case Jinjos are legitimate companies, while Minjos are pyramid schemes/scams. So what I am going to do is teach you how to metaphorically shoot egg grenades to check if the business is a pyramid scheme or legitimate business.
Ok, so now how to spot a pyramid scheme/scam:
- Google the name of the company and see what comes up, it’s a very quick and easy way to check. I recommend using Yelp.
- The company has to put on a presentation in order to convince you why it would be great to work for them.
- The company pushes you to recruit. If your income comes more form recruiting than from selling a product, it might be a pyramid scheme.
- If you have to do any kind of “initial investment” it’s usually a pyramid scheme! Companies are supposed to pay you, not the other way around. Also, they will usually try to disguise this with crappy products/services like vitamins, tea weight loss products, energy drinks, or overpriced life insurance. And if that’s the case, ask about their refund policy, if they hesitate or don’t really give a clear answer, it’s probably a pyramid scheme.
- If you get promoted quickly. At most legit companies it takes a while to get a promotion, so if employees are getting promotions left and right it’s most likely a pyramid scheme.
- If it just seems too good to be true.
I’ve also included a small list of companies to stay away from: USANA Health Sciences, Herbalife, PHP life insurance. Also just say away from a guy named Tai Lopez, you’ve probably seen his YouTube commercial at least once. He’s the guy who talks about how he just bought a Lamborghini. he’s like the human equivalent for-profit universities.
I hope this info helps you how to metaphorically shoot egg grenades to questionable businesses to check the legitimacy of it!
So to end this post I will tell you my experience with getting scammed. When I was a high school senior I got a letter in the mail from “The College network” a supposed company that helps college students fill out the Fasfa and practice tests for class placements. I wasn’t too interested in college prep tests, but I did want to get as much money from financial aid as I could, because I didn’t want the cost of high education to stop me from going to a four year university. I convinced my parents to sit through the online presentation of the services that they provided and at the time it seemed legit.
Do you see any yellow flags yet?
Well after begging my parents I convinced them to go through the payment plan option. Once it was time to file for the Fasfa there wasn’t a good way of contacting them. Email or telephone, none were getting me anywhere. So I decided to fill out the fasfa myself and with the help of my avid teacher. My parents never went to college so they didn’t understand applications and financial aid. Turns out it the Fasfa wasn’t so bad to fill out even with my parents owning a business, which does complicates things a little bit, but nothing we couldn’t figure out. I canceled the service once I file the Fasfa but by then that “company” already made with at least three thousand dollars of my parents hard earned money. I eventually made that money back through scholarships and paid most of my college that way, but I will never forgot the feeling of how stupid and guilty I felt for wasting my parents money.
Fast forward three years and my dad gets contacted by a man who gives him some advice for his business. Now the advice was actually helpful, but then he offered my dad help as long as he made a payment to the company in order to pay for the services. Luckily my dad called me with this news and asked my opinion of it. So I asked for the name of the company and did a quick google search (something I learned to do first from the first time we got doped). Low and behold I found the company on yelp. From what I remember it was about a 2 star rating. I read the reviews on how unethical and sketching the company was and I quickly told my dad to not give that man anything. The man came to my parent store a few days later to which my dad said to get the hell out of his business and if not, he’s calling the police. The man discovered my dad was no fool and quickly ran out the business.
“Fool me once shame on you, fool me twice shame on me”