The pyramid scheme, including chain letters, gifting clubs, and multi-level marketing scams, relys on a continuous recruitment of particpants as the scheme grows exponentially. One day, you may be approached by an individual who wants you to invest $10. You provide the $10 and agree to find ten other individuals who will invest $10 to you. In essence, you are then making a $90 return on your $10 investment. The ten people which you recruited must then go out and find ten new indviduals that are also willing to invest $10.

The scheme ultimately fails because as it progresses, interest wains and finding additional investors becomes more difficult. Typically only a small number of individuals end up making money and the rest are left with nothing.

Pyramid Scheme Alert is a non-profit, privately supported, all-volunteer, and totally independent consumer campaign designed to alert and educate consumers to the dangers of pyramid and multi-level marketing schemes.