pyramid scheme

Definition

Chain-recruiting scam in which the main objective is to continuously bring in new members (euphemistically called sales representatives, independent representatives, or even 'investors') than to sell anything of real value. In this scheme, 'A' recruits 'B' and 'C,' who in turn recruit 'D' and 'E' and 'F' and 'G,' who in turn recruit … and so on. Every new member pays an entrance fee (typically called 'investment' or some other beguiling name) which is divided among his or her recruiter, recruiter's recruiter, and … right up to the originator of the scheme. This charade continues until the whole structure collapses from the ever growing need for more and more gullible recruits and everybody (except the promoters and the early recruiters) loses out. See also Ponzi scheme. Not to be confused with pyramiding.