Is pyramid selling illegal?

Somebody tries to get you to invest in something with the promise of high returns. Even better, if you recruit other investors, you'll get a commission.

These are both red flags telling you to be careful. Con artists who approach you won't call this type of scheme "pyramid selling". It's up to you to recognize it for what it is.

One form of pyramid selling (there are several) is where you're offered a chance to participate in an investment that’s expected to pay off big. You’re required to hold onto the investment for a period of six months, for example. You can make even more money by recruiting other investors for, say, a percentage of the participation fees paid by the people you recruit.

There's no free lunch in life. The person running the scheme will pay your commissions out of your own money and disappear with the cash just before the scheme is found out. Proof once again that if it's too good to be true, it probably is!


Are you offered this type of investment?

Contact the AMF's Information Centre.

End of the warning