Pyramid schemes are not only illegal, they are a waste
of money and time. Because pyramid schemes rely on
recruitment of new members to bring in money, the
schemes inevitably collapse when the pool of potential
recruits dries up. When the plan collapses, most peo-
ple, except the few at the top of the pyramid, lose their
money.
The simplest form of pyramid scheme is the chain
letter that asks the recipient to pay $1.00 to each of five
names on a list, copy the letter, and then send it out to
new people with the recipient’s name added to the list.
In recent years, pyramid schemes have become more
sophisticated, and many have surfaced online.
Pyramid Tip-Offs
The pyramid scheme disguised as a multi-level market-
ing opportunity is not always easy to spot, but is just as
much of a scam as the chain letter. Here are some tips
to consider before participating in a multi-level market-
ing program:
• Avoid any program that focuses more on
recruitment of new people rather than the sale
of a product or service. If the program offers
to pay commissions solely for recruiting new
members, look elsewhere.
• Be cautious about participating in any program
that asks distributors to purchase expensive
inventory.
• Be skeptical about specific income or earnings
claims. Many programs boast about the in-
credibly high earnings of a few top performers
(“thousands per week” or “six figure-income”).
The reality is that most of the people recruited
into the organization are not making anywhere
near those amounts.
• Make sure the product or service offered by the
company is something you would buy and is
competitively priced. Illegal pyramid schemes
often sell products at prices well above retail
or sell products that are difficult to value, such
as health and beauty aids, new inventions, or
“miracle” cures.
• Don’t believe statements from a program that it
has been “approved” by the state or the Attor-
ney General’s Office. Under Maryland law,
multi-level marketing companies do not register
with any state office.
• Never sign a contract or pay any money to
participate in a multi-level marketing pro-
gram, or any business opportunity, without taking
your time and reading all of the paperwork. Talk
the opportunity over with a spouse, knowledge-
able friend, accountant, or lawyer. If you feel that
you are being subjected to high-pressure sales
tactics or are not being given enough time to
review the details, go elsewhere.
If you join a pyramid scheme disguised as a multi-level
marketing program, your decision will affect not only
you, but everyone you bring into the program. These
schemes cost thousands of Maryland residents millions
of dollars each year. Many people devote a substantial
amount of time trying to market these ultimately worth-
less ventures.
For information about Maryland law and multi-level
marketing, or to report a potential pyramid scheme or
other fraudulent business opportunity, call the Securities
Division at 410-576-7042.
Consumer Protection Division
200 St. Paul Place, 16th Fl., Baltimore, MD 21202
• General Consumer Complaints: 410-528-8662
Toll-free: 1-888-743-0023 TDD: 410-576-6372
En español: 410-230-1712
9 a.m. to 3 p.m. Monday-Friday
www.marylandattorneygeneral.gov/Pages/CPD/
• Health Consumer Complaints: 410-528-1840
Toll-free: 1-877-261-8807 TDD: 410-576-6372
9 a.m. to 4:30 p.m. Monday-Friday
www.marylandcares.org
• For information on branch oces in Largo, Salisbury,
Hagerstown, and a full list of oces across Maryland, visit:
www.marylandattorneygeneral.gov/Pages/contactus.aspx
How to contact us
The Consumer’s Edge is produced by the Maryland Attorney
General’s Office. Reproductions are encouraged.
Maryland
Attorney General
Anthony G. Brown
www.marylandattorneygeneral.gov