a pyramid scheme

LQZ

Senior Member
Mandarin
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Dear all,

While reading an artcle of 2011 edition of Chinese internet hotspot, I came across the above. Could you please tell me what "pyramid scheme" means here? Thanks.


LQZ
 
  • Egmont

    Senior Member
    English - U.S.
    A pyramid scheme is a form of investment in which earlier participants are paid off by the investment of later participants. Its success depends on continued growth in the number of participants. Since the pool of possible participants will inevitably run out at some point, those later investors will lose their money. That is why a pyramid scheme is a fraud, and those who operate them are criminals.

    A recent example of a pyramid scheme was the "investment firm" operated by Bernard Madoff.
     

    pops91710

    Senior Member
    English, AE
    pyramid scheme is a fraudulent business sales scheme where the person starting the business neither invests any money nor sells to the public but enlists people to buy into the business and buy the products and then asks them to do the same thus creating a sales pyramid where the person at the top (of the pyramid) makes all the money. see this http://en.wikipedia.org/wiki/Pyramid_scheme
     
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