Have you heard about a pyramid scheme? A pyramid scheme is nothing but a business structure, which mainly focus on recruiting new distributors instead of selling their products. Each newly recruited member needs to pay a joining fee, which gives as payment to the people who lie above them. Usually, pyramid scheme companies are referred to be illegal as they put more emphasis on recruitment and not marketing their products.

List of pyramid scheme companies:

1. Amway:

Amway was not initially considered to be a pyramid scheme since no payment will be given to distributors while recruiting new members and instead, they get a commission for the products brought by the new members. However, the company was asked to make some changes.

In recent days, Amway has filed a lawsuit in the Federal district court against the changes made to its business structure. But, the FTC informs that the distributors sell the products to consumers and not the new recruiters.

2. Herbalife:

FTC refused to call Herbalife as one of the pyramid scheme companies in 2016. Later, they conclude that many sales leaders earn as little as five dollars per month. So, they warn the company to prove that they have legitimate business model.

This will become a victory for the company, which faced various allegations recently. Moreover, many present and former distributors filed a class-action lawsuit against the company in the year 2004.

But, some reports declare that the company has a number of loyal customers who prefer to invest their money in Herbalife products.

3. Nu Skin Enterprises:

In the year 1990, FTC investigates Nu Skin Enterprises. To settle all the pending cases, the organization agrees to pay 2.5 million dollars to FTC. But, the Connecticut Attorney General has informed that the distributors get a reward for appointing new members instead of product selling. Once again, the company was investigated in 2014 and declared that it has followed a pyramid scheme. 

4. Vemma:

Vemma is the manufacturer of weight loss and energy drinks. In the year 2015, it is found that the company operates a pyramid scheme and offers greater rewards to recruit new distribution than selling products. Usually, new members are young people and college students who need to pay high starter packs and even high for monthly products. So, most of the participants have lost their money.

Not all companies are scams because some of them are legitimate with a legal following. But, before you decide to join, sign up, or accept a profession at any of the following companies do proper research and find out whether the company is right for you as well as your lifestyle.