Scam projects come in different forms, but the main feature of financial pyramids is their main source of income. Members of the structure earn money only if they attract new people: the team leader receives a percentage of the funds that subsequent participants in the system invest in the company.
The classic referral bonus works on the principle of earning on attraction, but in scam projects it is the only way to get income. If classic network companies earn on promotion and sale of a real product, then linkedin data the source of income for scam projects is investments of newcomers. When the influx of new participants in the system stops, “the shop is closed”.
How projects go to scam
Projects start to go down the drain when profitability indicators fall and cash outflow increases. The reasons for this economic phenomenon can be different:
- Limited target audience . When the structure of a hype project stops scaling and newcomers do not make contributions, the project inevitably closes.
- Panic of partners and investors. We are talking about a situation when, due to the influence of external circumstances (artificially created negativity about the company, the economic situation in the world or country), investors rush to withdraw funds from the project together and at the same time. Usually, such situations happen with banks.
- Market seasonality. Before certain events (for example, New Year or summer vacation) people also withdraw funds en masse.