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bezdomnaya's avatar

What should I do about my sister being involved in a pyramid scheme?

Asked by bezdomnaya (1435points) May 7th, 2009

I just recently had a fight with my sister because I believe that she is involved in a pyramid scheme (or something legitimate enough to not be legally considered a pyramid scheme but still not on the up-and-up).

I recently found out that she was soliciting my friends about her ‘legitimate business opportunity’. This made me incredibly uncomfortable, and I told her to leave my friends out of it. She got incredibly offended and pushed me into explaining why I wouldn’t want them to ‘profit from a lucrative business’, to which I responded that I thought she was involved in a pyramid scheme.

I’ve tried checking out the business she’s affiliated with: L(eadership)T(eam)D(evelopment) Team (yes, the team bit is redundant, kind of like ATM machine), but you need a password to get on the site LTDteam.com and if you google “LTD team scam” or “LTD team scheme” you get a bunch of stuff about these people soliciting people in McDonald’s parking lots and the like.

I want to show her that this is not right, but she seems very cult-ish about the whole thing. I also don’t want to push her away. Should I not meddle in her life? Or should I try to convince her of her (in my eyes) error before she lands herself in even more debt?

Sorry this got so long, btw.

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20 Answers

avalmez's avatar

sounds to me like you’ve done your job informing and attempting to persuade her. after that, she’s gotta take her own knocks in life. where your friends are concerned, i think it’s fair for you to insist she not attempt to sell them as it might affect your relationship with them. and if that doesn’t work, i’d go out of my way to disclaim her activities to your friends.

on ltd team specifically, i don’t know anything about them but looks like you found ample evidence for concern on the net.

oratio's avatar

My brother got involved in one of these things, I didn’t criticize him but just kept away from it. He came to his senses later on.

I don’t know. Hard to say what you should do since I don’t know the “scheme” or your sister. These things can get out of hand, though. But you don’t want your sister to feel that you see her as a gullible idiot either. It seems you have expressed concerns already. Maybe backing off and come back to it later, keeping an eye on your sister meantime?

quarkquarkquark's avatar

Your sister might not understand how a pyramid scheme works. The reason people buy into these things is because they do, actually, work. At least for a while, before they take all your money and fuck you over. If you’re not familiar with the process yourself, do a little research and explain to your sister the thinking, process and ultimate outcome of a pyramid scheme. Perhaps eventually mention Bernard Madoff and other famous rip-off artists who seemed “too good to be true” and actually were. If you can start this conversation without mentioning LTD Team and only bring it up at the end, so much the better.

If she still doesn’t believe you, tell her that she’ll lose all her money and then eventually you’ll have an “I told you so.”

bezdomnaya's avatar

Here is a good summary of what the company is and why it sounds scam-y.

drClaw's avatar

Try looking it up on www.ripoffreport.com, they have a lot of good info on scams like this.

charliecompany34's avatar

didn’t read the details, but “pyramid” is a red flag from the outset. many naive folk get sucked into it not realizing it is actually a scam.

what people need to do is be aware and know the signs of scam. two kinds of people in the world:

a. safe people.
b. gullible people.

safe people are somewhat skeptical and dont open junk mail and realize that mail is junk.

gullible people just want the solution and the quick fix. they want to lose the weight without eating right and exercising when the two is what you really have to do to lose weight, but who wants to put in the time or effort?

YARNLADY's avatar

Contact the authorities with your evidence and report an illegal activity. It is wrong to allow this kind of thing to continue to find more victims.

The_Compassionate_Heretic's avatar

It sounds like you’ve voiced your concerns. If she decides to listen to you or not is up to her.

wundayatta's avatar

I really don’t understand why you all have problems with these people building a pyramid or two. What? Are you prejudiced against Pharoahs, or something???

hungryhungryhortence's avatar

If she’s already made a money investment into this then it’s natural for her to defend it and deny any shadiness in hopes she hasn’t been duped. She heard you out so now back away and let her learn, no need to push her into any further paranoia or defensiveness to where it could bring other stress between the two of you.

YARNLADY's avatar

@daloon non-responsive to a serious problem – Not funny

bezdomnaya's avatar

@YARNLADY daloon’s responses are always good for a nice chuckle. They are always much appreciated as well as the serious responses.

Everyone, thank you for the responses! I’ve been obsessing about this situation ever since my sister and I talked about it. I will definitely back off, and let her think over the things I have said. Perhaps in a month or so, I will send her an e-mail asking her questions about the company. Hopefully, the answers she provides herself will be enough to clue her in to the scam. Lurve!

YARNLADY's avatar

@bezdomnaya OK, I’m seriously serious in my answers, most of the time.

bezdomnaya's avatar

@YARNLADY Your seriously serious answer was very much appreciated. Thank you!

Darwin's avatar

Has anyone told her that it is in essence Quixtar and thus Amway? Here is what ripoffreport.com has to say about it.

She may have to learn her lesson the hard way.

augustlan's avatar

Ugh. Amway. My mother got sucked into that hornet’s nest, along with many others while I was growing up. If your sister has any sense at all, she’ll wise up soon enough and get on out of there. Sadly, that won’t necessarily stop her from falling for the next get-rich-quick scheme that comes along. Some people are just naturally susceptible to this type of thing. You are perfectly within your rights to tell her not to solicit you or your friends. Other than that, there is not much you can do about her choices.

wundayatta's avatar

LTD is a multi-level marketing scheme, not a pyramid scheme. Pyramid schemes are illegal because they involve fraud. MLMs are legal, although people are foolish to join them.

Pyramid schemes get people to invest with the promise of high returns. The way they guarantee these high returns is by paying off the initial investors with the investments of people following them. Eventually the pile of investors gets too big to be supported by those following. You can’t recruit enough followers, and so the whole thing collapses, and people like Bernia Madoff go to jail.

MLMs are different, and are not fraudulent. They are also similar, in that early joiners make the money, and later joiners don’t have a chance to make anything. In MLMs, you sell something, it doesn’t matter what, but that’s not how you make money. You make money by recruiting your own team of sellers. You make money, because you get a percent of the sales of everyone below you, and of everyone those below you recruit. If you get in early, there’s opportunity for lots of new folks to join below you. However, like pyramid schemes, there is a saturation point beyond which it is extremely difficult to recruit new sales people, and so you can’t make much money.

These organizations seem to have a life cycle. Early adopters make a lot of money, and they get everyone excited, so lots more people participate, and then it grows to the point where new people can’t make money, and then the company dies. The founders then move on to start a new company all over again. So, Amway becomes Quixtar, become LTD.

Your sister needs to find out where in the life cycle this company is. If it’s early, she might make money if she’s good at recruiting new people. She has to be a good sales person. If she’s late, no matter how good a sales person she is, there won’t be enough people to recruit for her to make money. The market will be saturated.

Of course, this is all fairly unethical in my mind. They tend to prey on folks who are down on their luck, ready to try anything to make a buck. They place a vision of great wealth before these folks, who are susceptible to these visions, but of course they don’t say how unlikely it is that anyone will make the big bucks. Only a few people can. Only the earliest folks on board make the big bucks. But people have hope, and this blinds them to the reality of such organizations.

It also sounds like these organization add a religious element. They make it sound like this is a mission, not just a money-making thing. People believe they are helping others with whatever product it is. I have a friend who sells magnets that are supposed to heal you. She holds house parties in which she makes her pitches. She sends out emails advertising the house parties. Fortunately, she is ethical and offers folks an opt-out for her emails. She is a true believer.

If people believe they are not just making money, but they are making the world a better place, they will stick with the organization longer. They will also stick for the camaraderie, which gives them a sense of belonging and mission. God is on their side, and they are Christ’s warriors bringing sacred whatever to the masses. They bring them together in huge conferences to give out rewards (which make big bucks seem possible), and to whip up their enthusiasm. Music, dance, excitement, cheering the product and the mission. It’s a formula. Anyone could do it.

That’s what you’re fighting. If your sister is desperate, it’ll be a hard job, because she wants desperately to believe. The only thing you have on your side is information. You can be sure that for every argument you have, they have one to counter it. Appeal to her logic. Maybe even show her other ways to feel like she belongs. She can do good work if she wants, but this is not the way to do it.

You can’t tell her not to do it if she’s bought into the mission. You’re just an unbeliever. She knows better. Think of it like this. How do people give up religion? Slowly, over time, they come to see that things don’t make sense. If you can help that process along, feeding her information but not pushing her, she may open her eyes sooner rather than later. Or, at least, that’s my guess.

There are also deprogrammers who do this kind of thing. But they kidnap people and keep them in a room and it’s all pretty forceful, and I don’t think it’s the right thing to do. As someone else said above, sometimes you just have to let people make mistakes and learn from them.

oratio's avatar

@daloon Really good sum up.

maybe_KB's avatar

The vast majority of person who constantly invest in these ‘Business Opportunities’ are Gamblers, risk takers, fine line ‘junkies’ to the “I’m lucky” syndrome. These persons are also more susceptible to scratchers, lotto tickets, raffles, Bingo Keno night, casinos etc…etc…
“It’s a good deal!” They’ll say.
Its like a stock market.
Taking chances can be addictive.
“It’s an investment!” Is how a loved one or friend may describe their behavior.
It is not an investment- You’re down right gambling

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