Pyramid Schemes for Women

Why Women Join: It's Not Just Greed

by Robert L. FitzPatrick

Hundreds of thousands, maybe millions, of Americans have recently been solicited to join the various versions of the "Gifting" Pyramid Scheme. The most recent version of this scheme is spreading faster and reaching many more people than any others. This one appeals specifically to women.

All pyramid schemes permeate existing social groups. Among those that have been infected with the fraud include Hispanics, African Americans, New Age-minded people, fundamentalist Christians, and college students. American women (and now also in the UK where the scheme is spreading rapidly) represent the largest subgroup ever to fall into the folly of popular pyramid schemes.

Why have so many joined? Why have so many continued to participate even after news reports, Better Business Bureaus and government rulings state plainly that the scheme is illegal and the participants can be prosecuted.

Typical news reports say its is demon GREED. However, from the studies and analyses conducted at Pyramid Scheme Alert, we know that it is far more than that. In fact, it has never been shown that the people who join are the more avaricious people in their respective communities. Our observations show that most people who participate in pyramid schemes are not crooks and liars. The victims and the perpetrators (in a pyramid scheme, the victims recruit victims and are therefore also perpetrators) are, for the most part, ethical, spiritually minded, responsible, and law abiding. In fact, in several cities, it was the members of the local police or sheriffs' department who were the participants!

We see six factors causing this widespread fraud to be perpetrated by members of communities upon one another.

1. The Scheme Appeals to Basic and Treasured American Values

The schemes tell you that the program is based upon biblical concepts of giving and receiving, or the scheme is a way to finally achieve your constitutional right to pursue happiness, that it is an exercise in personal freedom, or that it brings people together to mutually share and support one another, or participation is an exercise in good citizenship or a way for people to compensate for years of discrimination and therefore a personal right.

In the case of the women-oriented schemes, the organizers say the program is attuned to the special attributes of women for cooperation, mutual support, and harnessing the power of vision and commitment. They say it utilizes intuition and networking rather than linear, rational thinking and competition that characterize male-based income opportunities. And, they also tell women that the money to be gained is to be used, as women usually do, for good, not greed ­ for children's education, to support the family with perhaps some to give to the needy.

All of these stories sound good and true.

2. The Scheme Is Spread with Beguiling and Insidious Lies that Mislead and Entrap People

The lie most frequently accompanying the program is that the scheme is legal. In some areas, people were pointedly told that local authorities had already reviewed the scheme and given it a clean bill of legality and legitimacy. Some were told the state legislature had voted on it and approved it and that many legislators were themselves participating.

In addition to the lie about legality is the usual deception about how the scheme actually works. People are told that it is not pyramid and than everyone can and will win, that there are no losers. The mathematical contradictions are obscured. People are told to stay positive and not succumb to negative voices, analysts and doubters.

These lies are spread not by clever promoters but between friends, neighbors and relatives in which trust levels are highest.

3. Few People Understand the Mathematics of Exponential Expansion

Pyramid schemes are mathematical tricks upon the investor. The schemes are based upon a false premise of continuous expansion when, in reality, such expansion is quite limited. If the plan involves each person recruiting just two others, 1,2,4,8, 16, and so on, the entire earth's population would be consumed with investors by the 32nd level. Obviously, such a scheme is not "unlimited" or "infinite", as the promoters deceptively claim.

While the schemes operate, the people at the bottom will always represent the vast majority of all who have ever participated, regardless of how many actually do get their money out. So, whenever the scheme does collapse more than 90% will lose ­ guaranteed.

Pyramid schemes are illegal because they are designed so that nearly all will lose, but deceptively recruit people by claiming all have a chance to succeed. Most schemes say that all will recoup their money with a huge profit. This is a devastating and insidious lie that is spread from one person to the next.

4. The Mass Media have Conditioned Many People Today to Believe that Success and Wealth should Come Easily and Quickly.

We are told that wealth is achieved mainly from being in the right place at the right time, not from contributing something of value to society. Knowledge and hard wok have been devalued by lotteries, gambling, stock market speculation, Hollywood, sport stars, TV game shows, etc., all of which are legal and publicly sanctioned. So, many people now feel entitled to wealth and, if they are not successful, they feel cheated. The Scheme plays upon these feelings of entitlement. The Scheme's perpetrators do not have to say very much or do a lot of persuading. Many people are ready and willing to accept the scheme's premises about having found the solution to instant wealth because it fits in with so much else they see and hear today.

5. Consumerism, which Inundates the Media and our Communities, Equates Personal Success and Human Value with Money and the Things Money Can Buy.

Thus, many people feel chronically deprived, unfulfilled and invalidated. No matter how much they have, it is not enough. Insecurity is flamed by talk of a coming Recession, the collapse of Social Security or of being "downsized" or made obsolete by new technology. Many people have come to live beyond their means now and are strapped with credit card debt. They need more and they need it now. This is why the scheme has attracted many middle class or even upper income people who are seemingly well off.

6. The Government has not Clearly Defined Pyramid Schemes and has Allowed Businesses to Operate that Are also Based on Pyramid Expansion.

This has left many people confused, misled and unprotected. The multi-level marketing industry (MLM), with hundreds of companies in its ranks, has been allowed to operate for years, using exactly the same methods for spreading its sales schemes. Some prominent ones, such as SkyBiz and Equinox International, have been prosecuted as pyramid schemes. Others, such as NuSkin, Amway and Herbalife, were prosecuted for price fixing, making false or misleading claims about products or exaggerating income potential. But, on balance, the pyramid-based sales programs proliferate with impunity.

Why are those pyramid plans legal and the Gifting Clubs illegal? Because government has been lax in prosecuting the pyramid sales schemes, many who have participating in the Pyramid Gifting Schemes are petitioning to legalize their programs.

The gifting schemes usually involve no product but are said to be based on simply "giving" money. But, it is not the lack of product that is the cause of their illegality any more than "giving" money rather than "investing" it is. Rather, it is the mathematical certainty that the bottom levels -- representing more than 90% of all who join -- MUST lose, since the scheme cannot go on forever. This essential fraud applies to any pyramid scheme, whether it is involves handing over cash voluntarily or buying goods.

At present, some states have no laws against pyramids. Some have adopted weak or confusing laws. Others just do not enforce the laws they do have. Millions of people have been solicited to join MLMs. Little wonder that consumers are confused and become easy prey for pyramid perpetrators.