since this is in the Business, Finance & Economics Discussions, i'd like to put in my 2-centimos.
i once was in the networking/pyramiding schemes but left because in theory it is unsustainable or theoretically if everyone was to go into networking, the population of the pyramid/network would go beyond the world population. we do have a finite population. in practice however (and what networking companies teach you), this is not the case because not everybody is interested with networking. networking is more on the convincing power to gain money. and this convincing power is how many companies do it, even the "non-networking" ones.
one of the differences between a networking and a non networking is the reliance on your down line or people you can recruit. at this point, the company will tell you, "but we have products". true, products are there for you to sell and some companies do tell you money comes from the products. but eventually when everyone is recruited (by you or by other people), potential investors will get exhausted. nobody will buy the product because everybody is also selling it. as the US FBI points out (
Federal Bureau of Investigation - Common Fraud Schemes ),
"The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses. "
i know this is a fast way to gain money and since not everyone is into networking, it would be impossible to recruit everyone in practice so convincing powers come in. but eventually people will gain the confidence ("high confidence level") to recruit other people for more income. those at the bottom will not get much because the number of investors has almost run out so if you're already in the networking business, you have to stay on top of the pyramid/network. it's not super-easy money but a faster way to get money. sadly, i just don't see a future in pyramiding/networking schemes. i am not putting the TS in a higher or lower position but perhaps it will be good to ask questions such as the invested money and how much will come back, who has to invest in it...etc. we should all do a little market research before diving into a business.
quick note: MLM, even legal ones, is also a pyramiding scheme.
Sources:
Wikipedia and Book sources (found below the article):
Pyramid scheme - Wikipedia, the free encyclopedia
US Federal Bureau of Investigation (FBI):
Federal Bureau of Investigation - Common Fraud Schemes
Investopedia (A Forbes Digital Company):
What Is A Pyramid Scheme?
US Federal Trade Commission (FTC):
"PYRAMID SCHEMES"