Pyramid schemes are one of the most ingenious ways of tricking people in search of making money easily and rapidly in the UK. Pyramid schemes work especially on those who have little or no experience in investing, so the best advice to avoid getting caught in a pyramid scheme is to pay attention on those offers which simply seem to good to be true.
There are several ways in which individuals can verify if they are victims of pyramid schemes, however, they prefer to believe that this would never happen to them and so they end up needing a London defence lawyer when it comes to recovering their money.
How do we recognize a pyramid scheme? Let’s see below some of the signs that when an offer is too good to be true, then something might be wrong with it.
Promises for high returns in a very short time
A pyramid scheme usually looks like a regular investment scheme based on a hierarchy of the members. The first person starting the scheme will recruit other persons and build the so-called pyramid. Usually, the last persons recruited are the investors who are promised a high yield on their investments. This is the best time to check how the investment scheme has performed in the past or even if it has a past.
Also, asking to talk to other investors could help in spotting the validity of the investment scheme. These little background checks have helped a lot of people to avoid the services of lawyers specialized in pyramid scheme scams.
Verify the product or service sold
Most of the times, pyramid schemes take the form of multi-level marketing schemes which are legitimate, however, the latter will sell reliable and genuine products or services, while the focus of a pyramid scheme is to collect money from investors while relying on them to pay fees or taxes on products or services that don’t exist or cannot be sold. So, a thorough verification of the products or services is a must before falling into a pyramid scheme fraud.
Ask how the money will be invested
Another simple way of avoiding becoming a victim of a pyramid scheme is to simply and directly ask how the money will be invested. This is because the money is usually used to pay older investors while the new ones are given small amounts of money to be kept content for a while until no money comes at all.
It is true that in theory avoiding being a victim of a pyramid scheme seems easier than in reality, however, being cautious costs nothing. Considering everybody cares about their money, asking a few questions and doing a little bit of research before making any investment is the best way of ensuring one’s financial soundness and investing in something genuine with lower but safer returns.