Top 10 Famous Pyramid Schemes

Published May 25th, 2021 - 04:58 GMT

Pyramid schemes is a form of network marketing or what is known as multi-level marketing (MLM) where the buyer not only gets the product but also becomes a shareholder in the company. All s/he needs to do is to get more people to buy the product, convincing them this is a way to make money.

In MLMs, salespeople make more money from recruiting other people to sell, rather than the sale of the actual products. This creates a system where the sales people at the top of a company make the most from recruiting others, while people at the bottom are losing money — hence why it’s called a “pyramid scheme.”

Here are examples of 10 famous pyramid schemes:

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1.Metabolife: Metabolife International was a multi-level marketing company based in San Diego, California which manufactured dietary supplements. The company went bankrupt and was forced to close in 2005.

2. BurnLounge: BurnLounge was a multi-level marketing online music store founded in 2004 and based in New York City. By 2006, the company reported 30,000 members using the site to sell music through its network. FTC eventually declared the company a pyramid scheme, and forced it to return $ 1.9 million to its customers.

3. Holiday Magic: Holiday Magic was a multi-level marketing company founded in 1964 by William Penn Patrick in the United States. Originally the company distributed goods such as home-care products and cosmetics. After 10 years the company was found guilty of fraud and was forced to pay compensation payments to everyone it tricked into joining and looting his pockets, and it closed in 1974.

4. WakeUpNow: WakeUpNow was a multi-level marketing scheme based in Provo, Utah. It sold products and services focused on health and financial management. It was founded in 2009 by Troy Muhlestein. The company was permanently closed in 2015.

5. United Sciences of America: United Sciences of America was an American company that was accused of fraud and shut down in the late 1980s. USA manufactured nutritional supplements such as "Master Formula", "Calorie Control Formula", "Fiber Energy Bar", and "Formula Plus", distributing them via multi-level marketing. The company went bankrupt in 1997.

6. Equinox International: Equinox International was a multi-level marketing company founded in 1991 and headed by Bill Gouldd In 1996. Equinox was making more than $ 195 million a year. FTC checked them for 10 months before it was able to gather enough evidence to prove that it was a pyramid marketing scam.

7. Koscot Interplanetary: Koscot Interplanetary was an Orlando, Florida based multi-level marketing cosmetic company selling mink oil-based cosmetics. It became entangled in numerous legal difficulties and went out of business in the 1970s.

8. Fortune Hi-Tech Marketing: Fortune Hi-Tech Marketing was a Lexington, Kentucky based company which used multi-level marketing to sell consumer goods and services. The company was founded in January 2001. In January 2013 the Federal Trade Commission and regulators for three states shut down FHTM for being a pyramid scheme.

9. MonaVie: MonaVie is a defunct, American multi-level marketing company that manufactured and distributed products made from blended fruit juice concentrates, powders, and purées. The company was the subject of several controversies. Health claims for its products had not been scientifically confirmed or approved by regulatory authorities, and its chairman had been previously involved in false health claims concerning another beverage company. The company was unable to pay debts of $182 million so it was forced to close permanently.

10. Solavei: Solavei was a social commerce network offering contract-free mobile service in the United States. The company was known for its use of incentivized referral plans and social network advertising programs. In addition to its mobile phone services, Solavei operated a social commerce network for its users. Ryan Wuerch founded the company in 2012 and went bankrupt in 2015.

1.Metabolife: Metabolife International was a multi-level marketing company based in San Diego, California which manufactured dietary supplements. The company went bankrupt and was forced to close in 2005.

2. BurnLounge: BurnLounge was a multi-level marketing online music store founded in 2004 and based in New York City. By 2006, the company reported 30,000 members using the site to sell music through its network. FTC eventually declared the company a pyramid scheme, and forced it to return $ 1.9 million to its customers.

3. Holiday Magic: Holiday Magic was a multi-level marketing company founded in 1964 by William Penn Patrick in the United States. Originally the company distributed goods such as home-care products and cosmetics. After 10 years the company was found guilty of fraud and was forced to pay compensation payments to everyone it tricked into joining and looting his pockets, and it closed in 1974.

4. WakeUpNow: WakeUpNow was a multi-level marketing scheme based in Provo, Utah. It sold products and services focused on health and financial management. It was founded in 2009 by Troy Muhlestein. The company was permanently closed in 2015.

5. United Sciences of America: United Sciences of America was an American company that was accused of fraud and shut down in the late 1980s. USA manufactured nutritional supplements such as "Master Formula", "Calorie Control Formula", "Fiber Energy Bar", and "Formula Plus", distributing them via multi-level marketing. The company went bankrupt in 1997.

6. Equinox International: Equinox International was a multi-level marketing company founded in 1991 and headed by Bill Gouldd In 1996. Equinox was making more than $ 195 million a year. FTC checked them for 10 months before it was able to gather enough evidence to prove that it was a pyramid marketing scam.

7. Koscot Interplanetary: Koscot Interplanetary was an Orlando, Florida based multi-level marketing cosmetic company selling mink oil-based cosmetics. It became entangled in numerous legal difficulties and went out of business in the 1970s.

8. Fortune Hi-Tech Marketing: Fortune Hi-Tech Marketing was a Lexington, Kentucky based company which used multi-level marketing to sell consumer goods and services. The company was founded in January 2001. In January 2013 the Federal Trade Commission and regulators for three states shut down FHTM for being a pyramid scheme.

9. MonaVie: MonaVie is a defunct, American multi-level marketing company that manufactured and distributed products made from blended fruit juice concentrates, powders, and purées. The company was the subject of several controversies. Health claims for its products had not been scientifically confirmed or approved by regulatory authorities, and its chairman had been previously involved in false health claims concerning another beverage company. The company was unable to pay debts of $182 million so it was forced to close permanently.

10. Solavei: Solavei was a social commerce network offering contract-free mobile service in the United States. The company was known for its use of incentivized referral plans and social network advertising programs. In addition to its mobile phone services, Solavei operated a social commerce network for its users. Ryan Wuerch founded the company in 2012 and went bankrupt in 2015.

Tags:Pyramid schemes MLMs Multi-level marketing

Top 10 Famous Pyramid Schemes

1.Metabolife: Metabolife International was a multi-level marketing company based in San Diego, California which manufactured dietary supplements. The company went bankrupt and was forced to close in 2005.

4. WakeUpNow: WakeUpNow was a multi-level marketing scheme based in Provo, Utah. It sold products and services focused on health and financial management. It was founded in 2009 by Troy Muhlestein. The company was permanently closed in 2015.

7. Koscot Interplanetary: Koscot Interplanetary was an Orlando, Florida based multi-level marketing cosmetic company selling mink oil-based cosmetics. It became entangled in numerous legal difficulties and went out of business in the 1970s.

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