Scams

Pyramid schemes promise quick and easy wealth and are carried out similarly to chain letter or network marketing. You may be approached by e-mail, letter or phone. You may receive an invitation to an investment seminar, possibly recommended by someone you know. 

At first glance, a pyramid scheme may appear to be a normal business or investment operation. The difference between a pyramid scheme and legal network marketing, for example, is that the income of those who join a pyramid scheme depends on payments from new members they recruit rather than on products or services sold.

The products marketed in pyramid schemes that resemble network marketing are just props to make the operation look normal and legal. The products themselves are overpriced, of poor quality, worthless, or difficult to sell. The real purpose is to collect money from new members who pay for their starting packets. 

A new member pays a membership or other initial fee that goes to people higher up in the pyramid. That person is then supposed to receive a share of the fees paid by new members who join further down. 

Participants can only make money if the number of members grows indefinitely. In reality, all pyramid systems break down at some point as the growth comes to a halt, and those at the base of the pyramid lose the money they have invested. 

Pyramid schemes are illegal pursuant to the Money Collection Act in Finland, and are prohibited elsewhere in the world as well.

Stop

• Be careful if you are asked to get involved in an activity that will bring you income based on new members you recruit, or if you are promised your income will grow as the membership base expands.
• Be careful if new members are asked to purchase expensive marketing or starting packets that are said to guarantee good income. The packet usually consists mostly of marketing materials, a description of an investment strategy or other information that has no verifiable value.
• Find out about the background of the party doing the marketing and demand justifications for the marketing claims. You may find criticism of the operation on the Internet or obtain it from authorities. Just the fact that an operation is not mentioned on a warning list, however, is no guarantee of legitimacy. As for positive comments on discussion boards about experiences with the operation, they may have been placed there by the marketers themselves.
• Be careful if you are promised a sure way to get rich quick with assurances that the operation is a legal form of investment and with grand claims about how such-and-such a policeman, doctor or other respectable person is involved.
• Be sceptical about the marketing of "miracle products" with unheard-of weight loss or health benefits, for example.
• If an operation involves selling products, find out exactly what they are, how much you have to invest in order to join, who the target market is, and whether the products are competitively priced and likely to appeal to a large audience.
• Don't be too quick to believe assurances and recommendations from people who talk about how much they have earned. Even if an operation is recommended by a friend or relative, it's no guarantee that the arrangement is sound – your friend may have been swindled, too.
• Don't agree to join an operation or pay a starting fee at an "investment seminar" or other marketing event at which you are pressured to make a decision. Always demand time to consider the matter, discuss it with people close to you, and seek out unbiased information.

Act

If you suspect a pyramid scheme or money collection in the guise of a business operation, contact the lotteries and firearms administrative unit of the Ministry of the Interior.
Ministry of the Interior, administrative unit for lotteries and firearms (in Finnish and Swedish)