How to spot a pyramid scheme?

Sneha Batra
3 min readSep 24, 2020

Most of you would have heard about the dangers of joining a pyramid scheme. You would have been advised by your friends or peers about the shady practices of the system. But not only are such pyramid schemes extremely destructive to the individual, but it also has a very drastic negative effect on legitimate businesses like Qnet India and other direct selling companies. For years, Qnet and other direct selling companies have been associated with pyramid schemes by people who do not understand the working of the direct selling industry or by who deliberately want to tarnish the reputation of such companies. Therefore, it is more important than ever that people recognise what a pyramid scheme really is and how it is different from direct selling companies in India like Qnet.

What is a pyramid scheme?

A pyramid scheme is a business model where the objective is to recruit new members with a promise of payment or bonuses for enrolling other into the scheme under them, rather than for the sale of products or supply of investment.

Pyramid schemes differ from a Ponzi scheme as in the latter, participants are paid the returns promised to them by using a portion of the money collected from the new investors as the initial investment.

There are many reasons why all pyramid schemes are doomed to fail in the end. The most important and crucial of these factors is that newer recruits will find it harder to get more recruits under them as time passes. In fact, in a system where each new member has to add six new members under them, the global population will turn out to be insufficient after the 13th level. As newer recruits find it hard to find anyone to join under them, the system fails.

Pyramid schemes are illegal in most countries of the world including India.

How to spot a pyramid scheme?

Spotting the difference between a pyramid scheme and a legitimate business can be hard, but it is not impossible. One of the tell-tale signs of a shady pyramid scheme is the time pressure that they put on new recruits. Ads like ‘once-in-a-lifetime opportunity’ and limited time offer must be viewed with caution. Promises of life-changing sums of money quickly are also to be viewed with an eye of suspicion. If it seems too good to be true, I might not be true.

One of the biggest signs of a pyramid scheme is the extreme emphasis on recruiting new members. If you receive more compensation for recruiting a member than for selling the products, there is a high chance that you are in a pyramid scheme. Also, the objective of direct selling companies is to sell their products. If you required to pay a joining fee or monthly fee, the chances that you are in business with a pyramid scheme and not a direct selling company.

Why Qnet is better!

Qnet is a direct selling company whose main objective is to bring high-quality products to its customers via distributors. Qnet works by paying commission to their distributors for selling their products to the customers. Qnet follows strict guideline and regulations laid down by the government of India and are a legitimate business in many countries. It has also laid down strict rules and regulations for its distributors to follow and to prevent any misuse of power.

Qnet has over two decades to experience in helping customers get the best product while creating a global network of direct sellers and distributors that work together for its success.

Pyramid schemes have given legitimate direct selling businesses and multilevel marketing companies a bad name. This has impacted the growth of the industry in India and needs to rectify. You can always fight fire with fire. Share this article with three of your friends and ask them to do the same till you beat pyramid schemes in their own game. Help your family and friends to differentiate between a dangerous pyramid scheme and a legitimate business opportunity.

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Sneha Batra

Just a small town girl lost in the whole wide world. trying to find a path and be who she is meant to be.