Pyramid schemes are defined as a form of investment in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones. Pyramid schemes prey on college students and younger adults that may be working minimum wage jobs but are putting in way more effort for their jobs.
These pyramid schemes come in many shapes and sizes and may actually seem like something that could work for you when it is first pitched. However, in the long run, they only work for the people on top - or if you have piles of money you can waste on buying different types of products.
College students want to make money, and honestly, most of them want to be able to do it with as little work as possible. Between balancing homework, exams, a social life, studying, and anything else that comes with being a college student - some of us just do not have time for a job. This means that some students will go through any means possible to bring in some extra income in order to have money to pay rent or buy groceries. And unfortunately some students don't yet understand that making money on a weekly or bi-weekly basis means actually working a job - and putting in 20 or more hours a week - and not being a part of some "get rich quick" scheme that someone has convinced you actually work.
College students need to understand the risks of being a part of these types of businesses and need to know the ways that they can protect themselves from accidentally becoming a part of one. They will bring you nothing but lost money and wasted time. Many people that are in one of these pyramid schemes will advertise it as "being your own boss" or that they have started their own business. They are simply you selling products that you have bought, and in some cases, the products are falsely advertised or are not worth the price that they are being sold for.
These types of "businesses" are actually hidden in plain sight and some companies that you might actually already know about might be pyramid schemes. Businesses such as It Works, Cutco, HerbalLife, Mary Kay, Avon, Amway, and LuLaRoe are these types of businesses that prey on people that want to make money without working for it. No matter what anyone at these companies says, you will not make any money unless you sell a large amount of the products that you have to pay for upfront - which means the products have to be sold at a higher value in order for you to make a profit. At the end of the day, that means that products that are being made for a small fee - you then have to spend your own money to purchase - and then have to be turned around and sold at a much higher value than retail price which means people will be less interested in the products you are selling.
Learn more about how to avoid these schemes, the basics of the companies, and more in Part Two of my series on Pyramid Schemes.