How to stay away from pyramid scheme in Pakistan?

The pyramid scheme in Pakistan is a growing fraud and a sort of illegal trend of the modern age. This is because nowadays, communication has become really easy through easy access to the Internet and technology.

Before getting into the topic, one must know the real concept of pyramid schemes in Pakistan. So for that, continue your reading.

Pyramid scheme

A pyramid scheme is an illegal way of business in which a group of people do recruitment and ask people to invest and bring more participants.

People without thorough research, start the work in greed of double the profit that the illegal, fake business company offers them. After getting enough participants and investments, the fraud company is lost in sight. They shut down everything and disappear.

Pyramid scheme in Pakistan is illegal but why?

The answer is that the pyramid scheme in Pakistan, according to sections 406, 420, and 109 of the Pakistan panel code, is illegal. It is basically a scam that asks people to pay a certain amount of fee or buy their products in order to get recruitment in their fake business company that has no legitimacy and makes a profit.

They basically give the idea of getting rich by using shortcuts, to people, especially youth. Which afterward not only wastes their time but also energy and deteriorates for one’s mental health.

Hence, it is of crucial importance to first critically think and research about the businesses and then start investing.

Types of Pyramid Schemes

Well, if you haven’t come across frauds called pyramid schemes of Pakistan then feel lucky but in order to stay safe, you need to know about the examples of pyramid schemes in Pakistan, so keep on reading because right below we are going to delve into the examples of such scams.

1) Up line or down line

It is the most known pyramid scheme up till now and of the most common structure. It basically has a rank from top to bottom where the promoter is on top then in the middle, there are recruits, and so on and so forth.

2) Multi-level marketing (MLM)

MLM becomes a pyramid scheme once it is done pretending as a legal business company that does direct sales to get maximum recruitment until they’ve more people than the sales.

3) Chain letters

Now the chain letter is also a type is pyramid scheme in Pakistan. This is quite an interesting yet confusing one. In this, people tend to send money in a chain to somebody and expect someone else at the money-receiving stage to send them money.

The most popular pyramid scheme

Now that you have some idea about the pyramid scheme you might be intrigued to know about the most famous one. So the most famous pyramid scheme in Pakistan, currently, is the Ponzi scheme.

Now you might think that what a weird name for a scheme and why?

So the same question intrigued me and my findings are that it’s because in 1920, a guy who was known to be a convict, named Charles Ponzi from Italy, exploited a scheme in which in the days’ value, 20 million dollars were lost by the investors of this scheme.

Conclusion

All in all, instead of having regulatory bodies such as SECP (Security and Exchange Commission of Pakistan), still Pakistan is struggling with a wide range of pyramid schemes.

No doubt, it is a matter of concern for all of us yet to fight against such scams, we all need to be smart enough to analyze the opportunities any company has to offer you and research thoroughly about the schemes we hear about.

That is how, we can be aware and can be aware of those around us to stay safe from such frauds.

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