Pyramid selling
A pyramid scheme is an illegal business model that relies on recruiting new participants rather than selling genuine products or services. People who join are typically encouraged to pay money and recruit others, with the promise of earning income from those new recruits.
While some people who join early may receive payments, pyramid schemes are unsustainable and eventually collapse because there are not enough new recruits to support the growing number of participants. As a result, most people lose money.
Pyramid schemes often promote unrealistic income opportunities and can be disguised as investment, business, or sales opportunities. In Australia, pyramid schemes are illegal under consumer law.
Understanding how pyramid schemes work and recognising the warning signs can help you avoid financial loss and protect yourself from scams.
For more information, download the pyramid selling fact sheet PDF (291.7 KB).