PENALTIES FOR PROMOTING PYRAMID SCHEMES IN POLAND – DECISIONS OF THE PRESIDENT OF THE POLISH OFFICE FOR THE PROTECTION OF COMPETITION AND CONSUMERS
HOW TO RECOGNIZE A PYRAMID SCHEME?
Pyramid promotional schemes involve consumers being persuaded to participate in a “project” in exchange for the promise of remuneration or other benefits, which depend primarily on bringing more people into the scheme rather than on the sale or consumption of products. Such schemes most often offer investments in tokens, cryptocurrencies, educational or language packages, apartments, etc.
The scheme of operation of a pyramid scheme is basically as follows: you put money into a supposed investment, you refer other people, and you get paid for introducing them. Your money is not actually invested, it is used to compensate the people who brought you into the system. At the same time, your compensation comes from the contributions of people you have directly and indirectly referred. In this way, it is you, your friends and your friends of friends who are funding a system that is not really investing anything. Therefore, after a period of time, the system has to fail because the money paid in is not invested in any assets and does not make a profit. The money goes to the organizers and the highest position in the chain. The system works as long as the number of people joining and contributing money increases exponentially, which is not sustainable. As a result, the system collapses and the money invested is lost.
