Sri Lanka central bank probe finds 21 pyramid schemes
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ECONOMYNEXT – Sri Lanka’s central bank bank said its investigations have discovered 21 companies that were operating pyramid schemes.
Pyramid schemes also known as multi-level marketing and direct selling are recruitment programs where one member recruits a number of others in an expanding pyramid called a ‘downline’ chain letter-style.
A portion of the fee flows up towards the recruiters and their recruiters (upline) who are fewer in numbers.
Eventually an exponential amount of downliners lower in the pyramid lose their money, and small number of upliners who promoted the scheme recover their money.
When a pyramid scheme eventually collapses, up to to 99 percent of the downliners could lose their money.
While a scheme is operating there are also a large number of losers who drop out (called attrition or churn) which experts estimate is typically around 95 percent.
Since they usually recruits are friends and relatives, pyramid schemes also lead to shattered relationships, experts who study them have found.
Listen here how to identify basics of pyramid schemes
One of the companies, designated as a pyramid scheme has got a court order prohibiting their name from being published, the central bank said.
Content retrieved from: https://economynext.com/sri-lanka-central-bank-probe-finds-21-pyramid-schemes-200357/.
