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Pyramid/Ponzi Scheme Fraud Reporting

Taxonomy Code: FN-1700.1470-650

Programs that provide a hotline, website or other mechanisms that people can use to report the activities of multi-level marketing businesses like pyramid and Ponzi schemes. Both involve a scam in which early investors (usually purchasers of goods or services) are paid using money coming in from new marks. In a Ponzi scheme, participants believe they are actually earning returns from their investment whereas in a pyramid scheme, participants are aware that they are earning money by finding new investors and actually become a willing part of the scheme. When the scammers can't raise enough money from new investors to pay earlier ones, pyramid schemes falls apart. Similarly a Ponzi scheme is able to maintain the illusion of a sustainable business only as long as there continue to be new investors willing to contribute new funds and most of the investors do not demand full repayment and are willing to believe in the non-existent assets that they are purported to own. Pyramid/Ponzi scheme fraud reports may be filed by victims of the fraud or by people who have information about individuals they know to be perpetrating these types of scams.

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