Scams of My Life: The Pyramid

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This is one of the older ones, but possibly not the oldest scam in the book. I honestly couldn't tell you which particular swindle gets that prize, but next week's story is a contender and another one of the classics, The Spanish Prisoner. More on that next week. This one, the pyramid, is the one with the most personal history for me.

My introduction to this one was a "game", which was introduced to me by a social-manipulating "friend" I will call J. It was called Zap and it quickly went through my High School like wildfire, and got to the point where there had to be an assembly concerning basic mathematical concepts like exponential growth... more on that later.

How It Works

  • You are initiated into a system that can win you [FABULOUS PRIZE] and all you have to do is follow the rules
  • Rule one is initiate [NUMBER] of people to operate below you
  • Rule two is to tell them Rule one
  • [INSERT BAFFLEGAB]
  • Profit!

We've probably seen this as part of a Multi-level marketing, ponzi scheme, or even a chain letter. You might not be old enough to remember those. The key point is this, and I'll put it in large font:

There is no such thing as infinite growth inside a closed system!

So let's do some basic math. Assuming a population of ten thousand [10 000] willing to go through this nonsense, and that there's ten tiers before a mark reaches the profitable peak, thus recycling the initiators and anyone who's gone through it. IF... each mark is only required to enlist five more marks each, then...

GenerationRecruitedRemaining Population
119 999
21+59 994
31+5+259 939
41+5+25+1259 844
51+5+25+125+6259 219
61+5+25+125+625+3 1256 094
71+5+25+125+625+3 125+15 625?Whoops

In this closed system, it's easy to see how demand manages to quickly outstrip supply. You might think that the operations with larger fields of participants would have a plausible supply that would extent to viability, but that would be forgetting the fact that the number if recruitments is always increasing. Sooner or later, demand for recruits is going to outstrip supply. The last number in generation seven is already more than the initial population. You can run the synthesis yourself. You will run out of available population to play the "game".

Now onto the iterations I promised you.

Story 1: "Zap"

Flashback to 198X, I'm a tween in High School [things be different in Australia - deal with it] and so is J. I'm asked if I liked having wishes granted. Well, dur, didn't everyone? J says they know a "magic spell" to guarantee wishes get granted and part of it involves drawing some special symbols on the back of my hand.

Whatever. I was in for a giggle.

In the process of "explaining the magic", I'm asked to provide two numbers between one and ten. I pick a couple and, at the end of the process, I have the word "ZAP"on my hand and the two digits. I had to "Zap" X many people in Y days or I would not get a wish.

What. The actual. Flip. This was not as advertised. I could not Zap J as they were already Zapped, as evidenced by the mark on their hand. I had to go and find X many different people to Zap to get my fondest wish granted.

Still believing in magic, and being a nerd of few friends, I managed it. Barely. Small shock that the aforementioned wish did not come true and it was all a magnificent pile of horse apples.

Because of course it was.

I am very salty in J's direction to this day and Zap was just one of the many symptoms of a budding sociopathy that included psychological manipulation. But that's not this story.

Suffice to say that "Zap" was going viral.

There were, perhaps, two thousand kids in that school at the time, but those kids had friends who went to other high schools, or they had siblings who went elsewhere. It quickly blew out of all proportion. I soon had complete strangers asking me if I believed in wishes. I had former bullies asking to be my friend if they could just do one thing. [Spoilers, it was to "Zap" me]

I quickly realised the math of it before the entire rest of the school, by the way, and "Zapped" myself by the beginning of the second week. By the third, that wasn't enough as I "had two hands".

I basically learned ambidexterousness out of self-defense. Not only could I legibly "Zap" myself on both hands, but also do so in indelible marker.

"Zap" lasted for five weeks before the school assembly was called and everyone was walked through the math. Nevertheless, a rough half of the school thought "RIP to them, but I'm different" and continued the "game" on for another fortnight.

A flame that burned brightly, but burned out relatively quickly.

Story 2: MAKE.MONEY.FAST

To those of you among my audience old enough to remember the times before HTML... I am very sorry for the flashbacks this gave you. This is OLD internet spamlore. Back before AOL brought the internet to everyone and not just to people experiencing tertiary education.

The screed of which is probably scrolling through your head if you remember it, but the premise was the same. Make a copy of the letter and remove the first name on the list, but first send them a card with a small amount of folding money to the address provided. Move everyone else up one on the list of ten provided and add your name and address to the bottom of the list. Pass this on to as many people as you can and you can be a surprise billionaire very very soon! Honest!

And if you don't pass this on, then here's a list of horrible things that happened to people who broke the chain!

Nevertheless, some people didn't get the idea properly and inserted themselves halfway up or at the top. Since this was the early days of the internets, I'm sure they managed to rake in something. And there was always a new set of suckers whenever the education year started and a new flock of rubes took their baby steps into cyberspace would circulate it to varying degrees of success and certain degrees of failure.

It used to warm the cockles of my heart to see it bloom once a year. Until AOL realised they could sell the internet to the common Joe Coffeemug and all of a sudden there was an ENDLESS STREAM of people posting with hope that you, too, could MAKE.MONEY.FAST 9_9

It eventually burned out as the people forwarding it were sending it to people who had already forwarded it to the kind of people who forwarded it... They caught on in the end, and that's the kindest thing I could say about them.

Except for when...

Story 3: "Dear Friend..."

The exact text of MAKE.MONEY.FAST got printed out with a "Dear Friend" appended to the front and posted to any address found in the White Pages [Aussie telephone directory, in case you're wondering]. The novelty part of this was the five cent coin taped to the screed.

I, wise to this horsepucky by now, pocketed the five cents and tossed the rest into the recycling, unread. Heck, I only read the first one through to make certain they had, indeed, copied out MAKE.MONEY.FAST verbatim and changed very little indeed.

This included putting themselves partway up the list. Fools never differ, I guess.

It lasted, perhaps, a few months. Those who tried it realised they were spending more on postage and loose change than they ever received from a gullible mark.

Meanwhile, I made twenty-five cents out of it. Paint the town beige.

Story 4: Joker88

This is one of the more famous ones. It wasn't like other scams, no. They sold you a certificate that entitled you to sell the same certificates through the intermediary company of the title. You could only sell so many certificates and, with a paltry fee to the instigators, you were GUARANTEED MILLIONS when your name reached the top of the list.

I was no fool. Neither was my beloved spouse. We knew what this was.

My mother-in-law, on the other hand, fell for it hook line and sinker. We tried to talk her out of "investing", insisting that this wasn't like Amway [the "only" pyramid scheme that existed, according to her] and that they were genuinely a good thing. We even walked her through the math to show her that such a thing was impossible. Sooner or later, you run out of population who can, or are willing to buy.

We tried.

We failed.

In the end, we "invested" so as to stop her from getting ripped off, and barely got our money back out of it. This was barely two months from Australia banning the entire thing... and a further handful of days from people desperately looking for "investors" on Facebook to recoup their losses.

Needless to say, the alleged gentlemen who began it all were jailed for fraud and we can only hope that those who lost their shirts on it learned a valuable lesson in mathematical progression.

...probably not. Because there is still...

Story 5: Multi-level Marketing

We all know this one. A friend of a family member is hosting a party and they're trying to make a little extra pocket money. You could really help them out by coming along. Bring cash.

You get there and... tupperware party. Lingerie party. Jewellery party. Spanx party. Insert whatever gimcrack horsepucky they're taking to the next level and -hey- while you're buying, you can fill in this form saying you're willing to become part of the [BRAND] family! You too can host parties like this and make a little extra pocket money.

If you're silly enough to join the [BRAND] family, you quickly learn that you make more money signing people on to join the gang than you ever did selling [PRODUCT] to anyone willing to come along and take a gander.

They always fizzle out as there's only so many people who can buy [PRODUCT] in the first place, and never enough people willing to sign on. Eventually, you have so much demand for [PRODUCT] Starter Kits that the factories can't keep up and either the supply dries up or the quality nosedives and the whole thing collapses like a supernova.

It's hardest to not buy into this one because they play HARD on the sympathy factor, you don't want [FAMILY MEMBER] or [FRIEND] to lose their shirt, do you? Surely you can help them out and buy a Starter Kit. You don't even have to sell anything, you can wear most of what they send you yourself.

Please... They just need one more sale to break even...

That "just one/a little more" seems to be a common line in the lowest tier, and a lot of other scams, come to think of it. I'll get you to join in with the chorus when it occurs.

How to Prevent it

Learn, like I did, to recognise a pyramid from a standing start. As soon as they mention enlisting any number of others under you, nope the heck out of there. If you want to buy some of the product on offer, that's up to you. But never, ever, sign on to their crazy train.

If you want to, introduce them to exponential growth or mathematical progression being unsustainable in a closed system. You can even clip and save the math and the chart if you like.

Heck if they argue about the much larger population than the example, be prepared to run them through the ever-increasing numbers until there is no population left to take on the fabulous opportunities they're offering.

If they tell you to sign up before the gravy runs out, then they're not your friend - they're a sociopath and you should nope out of there both harder and faster. Trust me on this.

The gravy, like the cake in Portal, is a lie. Don't buy into it.

[Image (c) Can Stock Photo / timbrk]

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