KLAS-TV Channel 8 News Las VegasHow to Identify and Protect Yourself From Pyramid Schemes

How to Identify and Protect Yourself From Pyramid Schemes

Scams, schemes, and just about everything else have come across Teri Martin's computer. The Las Vegas woman says she's seen it all. One e-mail that came through appeared to be a bill from AOL, her Internet provider, but it was just another disguised scam that luckily she didn't fall for: "It's a good one, it made me investigate a little bit more because it did look authentic," said Martin.

Pyramid schemes are disguised to look like direct sales or home business opportunities. Rombardo says the perpetrators contact potential partners through emails. But there are a couple of red flags alerting you of a pyramid scheme. "If your incentive or the income you earn is based upon your ability to recruit other participants and not the selling of a product--that is a pyramid scheme," he warns.

So an 8 On Your Side warning: when it comes to Internet and home business opportunities look at the incentive and how you'll earn an income. Also, before investing take a close look at the program, find out the startup fee and what the projected profits will be. "The other thing to look for is promises of large significant payouts," Rombardo says. "And investments up front: if they want money from you to sell their product, you might be investing in a pyramid scheme."

Also beware of gifting clubs. They can look similar to pyramid schemes. But remember you never have to pay for a gift. One way to tell if a pyramid scheme has found you is if the e-mail is unsolicited. If you belive you've been a victim of a pyramid scheme, you can contact the Nevada Attorney General's Office.

For more info, check out PyramidSchemeAlert, touting itself as 'The first international organization to expose, study and prevent illegal pyramid schemes. A consumer organization to battle the Millennium's fastest growing fraud."