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Whereas the emergence of pyramid schemes exerted considerable impacts on people’s lives, up to now, far too little attention has been paid to the experiences of members from the sociological perspective, particularly in non-Western contexts. Therefore, this study illuminates social processes underlying participation in such schemes in a less studied social setting, Iran. This article also critically traces the social and psychological consequences of membership in pyramid schemes. We adapted a critical ethnographic approach, including participant observation of local branch offices, followed by 16 in-depth interviews with the former members of schemes. Our findings suggest that the practices deployed by the schemes lead to the building of social identity, namely, “superhuman,” mainly based on the misinterpretation of the real world. Finding the reality surrounded deliberately contrasted with the firms’ promises, the constructed identity fails, and members lose their social capital.

This study sought to diagnose the factors leading to the mass uptake of unregulated pyramid schemes in South Africa. The study adopted an exploratory and qualitative research design. Face-to-face interviews were conducted with 20 respondents using a non-probability sampling technique known as purposive sampling. The respondents were drawn from the target population of individuals who have previously used unregulated pyramid schemes. Data were analyzed using the Nvivo framework matrix. The findings of this study show that individuals are motivated to join pyramid schemes because of the expected benefit or return, accounting for 40%, followed by current economic conditions (30%), friends and family recommendation (15%), desire to get rich quickly (10%), and past performance of the scheme (5%). This study has contributed to the literature on multi-level marketing and pyramid schemes in South Africa and the developing world in general. It will further act as a launchpad for designing policies in the financial services sector.

Community-level vulnerability to pyramid scheme fraud may be affected by place-based sources of strain and opportunity. Using national victim data from a pyramid scheme fraud case from 2000–2013, this research explores pyramid scheme adoption with group-based trajectory modeling (GBTM). GBTM is used to look for distinct trajectories of pyramid scheme join rates and to explore the effect of strain, as measured by a county’s Social Vulnerability Index and unemployment rate, and opportunity or protection, as measured by a series of social capital variables, on the group trajectories. Findings suggest that county-level strain, including the county’s Social Vulnerability Index and unemployment rate are related to pyramid scheme victimization, especially early adoption. We also find that social capital variables – which can, in theory, reduce strain or increase opportunity – have a nuanced relationship with fraud victimization. While our findings are drawn from a single pyramid scheme, they point to the potential to analyze case data to inform preventative and monitoring strategies appropriate to local-level characteristics.

Investors’ confidence is often abused by individuals who take advantage of investors on the financial market through fraudulent investment schemes. This article analyses factors that expose investors to Ponzi schemes. This study adopts a logistic regression model to assess the chances of investors falling prey to fraudulent investment schemes. This relationship is hypothesized as a function of affinity and trust, risk appetite, investment knowledge, understanding of Ponzi scheme, awareness of failed investment company, and demographic factors. The article reveals that affinity and trust, investment knowledge, awareness of investment company failure, understanding of Ponzi and educational level significantly affect the chances of an investor being victim or a non-victim of a Ponzi scheme. Demographic factors exhibit the expected relationship although not significant. The investment market can in no way be free of Ponzi schemes. Regulators of financial markets would have to intensify education of investors on how to identify and avoid Ponzi schemes. By analysing investors’ Ponzi victimization factors, this article adds to our empirical understanding of the factors that tend to put investors at risk of falling prey to Ponzi schemes.

This review provides a guide to macroeconomic applications of the theory of rational bubbles. It shows that rational bubbles can be easily incorporated into standard macroeconomic models and illustrates how they can be used to account for important macroeconomic phenomena. It also discusses the welfare implications of rational bubbles and the role of policy in managing them. Finally, it provides a detailed review of the literature.

Multi-level marketing (MLM) faces significant challenges that deter potential distributors and customers primarily due to its often-perceived resemblance to Ponzi schemes, pyramid schemes, and other illicit get-rich-quick schemes. The structural and operational similarities between MLM and Ponzi schemes contribute to confusion among stakeholders. This study analysed how the ability to distinguish between MLM and Ponzi schemes affects distributor motivation to join MLM. Quantitative research methods were used to achieve the research objective. The study employed a cross-sectional design and gathered data via copies of a questionnaire from a sample of 368 MLM distributors in the KwaZulu-Natal Province of South Africa. Descriptive and inferential statistics were applied to present and interpret the data. The results highlighted the clear distinctions between MLM and pyramid schemes. A standardised multiple linear regression analysis was conducted, showing that the model predicting distributor motivation was statistically significant. This indicates that the methods used to differentiate between MLM and Ponzi schemes, along with other predictors, collectively account for up to 37.6% of the variance in distributor motivation. The findings emphasised that distributors are more likely to engage in MLM if they can effectively distinguish it from Ponzi schemes. Therefore, MLM companies should equip potential distributors with the knowledge and resources necessary to discern between legitimate MLM opportunities and fraudulent schemes. Furthermore, it is recommended that MLM distributors organise local associations or unions to advocate their rights and interests, and safeguard members against fraudulent MLM practices and other entities that exploit the MLM model for personal gain.

Objective: to research the hybrid securities test as a regulatory tool against pyramid schemes.Methods: dialectical approach to cognition of social phenomena, allowing to analyze them in historical development and functioning in the context of the totality of objective and subjective factors, which predetermined the following research methods: formal-logical, comparative-legal, and sociological.Results: the work examines federal securities law as a tool to deter and regulate illegal pyramid schemes. Pyramid schemes are among the most prevalent forms of consumer fraud in the United States and they victimize thousands of individuals every year. The rise of the internet and social media has made it even easier for pyramid promoters to target potential recruits, often those who are already particularly vulnerable to consumer fraud. The federal securities laws have proven to be robust regulatory tools against pyramid schemes. However, the test used by federal courts to determine whether a scheme meets the definition of a security has produced uncertainty and inconsistency in the law. This work proposes that when pyramid schemes are alleged, federal courts should apply a hybrid securities test that incorporates aspects of risk capital analysis. In so doing, courts will be better equipped to focus on the economic reality of pyramid schemes and to draw a more principled line between illegal pyramid fraud and legitimate enterprises. Scientific novelty: the work proves that the problem of pyramid fraud is only growing. Despite the investment of significant governmental resources, undeterred fraudsters continue to form new pyramid schemes with growing regularity. The federal securities laws were enacted to protect the public from precisely these kinds of unsubstantiated, misleading, and fraudulent investment opportunities. However, courts inconsistently applying the Howey test continue to draw unprincipled lines and exclude pyramid schemes from the ambit of the federal securities laws based on the red herring of investor efforts. This work argues not that the federal courts should ignore the role played by distributors in pyramid schemes but rather that they should focus attention on the degree of control that investors may exercise as a function of that participation.Practical significance: the main provisions and conclusions of the article can be used in scientific, pedagogical and law enforcement activities when considering issues related to using the hybrid securities test as a regulatory tool against pyramid schemes.

While statisticians have simulated the expected rate of growth in pyramid schemes, this research examines actual data on the spread of an alleged pyramid scheme in Montana. Fortune Hi-Tech Marketing (FHTM) was a multilevel marketing firm, sued by six states and the Federal Trade Commission and permanently shut down in 2014. Data from a settlement with the State of Montana provide a population of participants in a geographic region with definable markets and offer unique insights into local contagion. The authors analyze the pattern of FHTM adoption within a diffusion-of-innovation framework. The findings confirm that nearly all adoption results from interpersonal influence (i.e., imitation) and indicate that participation is higher in counties with larger economic contractions. The authors add to existing guidance about early indicators of fraudulent activity and discuss intervention and prevention strategies that reflect the imitative nature of this diffusion process.

Problem Statement: Sport is an area of life that may or may not be of interest to the national legislator. Western European countries have taken a very different approach to the regulation of sport. Some of them adhere to the principle that sport should 'govern itself and refrain from intervening in this sphere of life, while others believe that it is such a significant social phenomenon (and one with a very high economic potential) that it requires the state to provide it with a specific structural and organisational framework. Purpose: The main purpose of this article is to describe the legal regulation of sport in selected Western European countries, which together form the Western European model of sport. Approach: The main approach, which was used by the author, is a formal and dogmatic analysis of generally applicable law provisions in Germany, Great Britain, France, Italy and Spain, which apply to the sports matters. The works of the doctrine were also analyzed, the author also gathered the information placed on the websites of various domestic sports organisations and European Union institutions. Results: Currently, among Western European countries, there are those that adopt an interventionist model in relation to sport and those that adopt a non-interventionist model (which can also be called autonomous). The model of sports regulation developed in a given country represents a 'difficult compromise' resulting from the need to maintain a balance between the distinctive features of sport (in the form of its autonomy and competition based on an organisational monopoly provided for a single sports organisation) and the necessity for the state to ensure conditions that make this competition possible without distortions, which is certainly not an easy task for the state. Conclusion: The way in which sport is regulated in a particular country is usually a result of its history and the actual influence of other legislation and international sporting organisations on the sporting organisations operating in that country.