OnlyCritiques.com Review:

A Ponzi scheme is a fraudulent investment operation that functions as a multilevel marketing system. No real business is done, and profits are generated based on the number of investors involved. It works in a pyramid fashion. It promises to provide high short-term returns to lure new investors. The high returns that Ponzi schemes promote need an ever-increasing flow of money from investors. The scheme cannot sustain itself for long and collapses when the increase of investors stops.

Ponzi scams have evolved from a fairly crude version created by Charles Ponzi, after whom these schemes are named, to more sophisticated methods of duping people. Greed is the driving force behind all such schemes.

Consider this example. A person called John Doe gets an idea to send an e-mail to about 100 e-mail addresses at random, which states that to make more than $3,000 in less than two weeks the individuals who receive the mail must pass on to 100 more people. A survey shows that 5% of those to whom the mail is sent are actually willing to participate. For every participant generated a sum of $1 is credited to the main sender. The senders make money through multiplication of participants from 1 to 5 to 25 to 125 to 625 to 3125, and the total amount made would be $3,905 in less than two weeks. The sting here is that, for the people involved, to make more money fresh recruiting must go on forever, which is not possible.

Such schemes are really scams as no real product, investment, or business takes place; it can’t even guarantee returns. The investments are advertised as legitimate and lucrative. Once people start investing, the real brain behind the operation makes the investment look successful and then disappears with all the money. In other instances, the scheme collapses due to investment slowdowns and the problems promoters face in paying out the promised returns. The scheme also stands the risk of being exposed because much of the "assets" that are on the accounting records of the so-called enterprise do not (cannot) really exist.

The best way out of being swindled is through prevention. Always do a thorough research of the promoters with whom you wish to invest. Insist on clear details and accounts. Beware of high promises that ensure high returns, owing to the unpredictability of all investments. Resist reinvesting without seeing profits, and always be on the look out for unethical or questionable conduct of services.

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