The difference between pyramid schemes and Ponzi schemes is in the methodology. Pyramid schemes rely on multiple levels of investors, each promising exorbitant returns to the succeeding level, whereas Ponzi schemes feature a central figure who promises exorbitant returns to all investors.
Knowing risk as they do, those at BusinessInsurance.org want to help you recognize and steer clear of these dangerous investments:
Pyramid Schemes
Pyramid schemes are organized into investor levels. At each level, investors are responsible for recruiting new investors and obtaining money from them. It begins when one person asks a small group of people for a sum of money in exchange for a promise of large returns. Each of those investors must then approach another small group of investors and make the same promises. After recruiting new investors, existing investors pay a portion...
By Al Lifchultz ยท March 06 2012
pyramid scheme, ponzi, business insurance, small business
