"Women Empowering Women".
May 3, 2002 10:08 AM   Subscribe

"Women Empowering Women". This pyramid scheme is spreading like wildfire in the UK, with huge amounts of money involved. Basically you get a lot of people to put up say £100. The more people you attract to add money to the pyramid, the better chance you have of moving up and becoming entitled to many times your initial outlay. However, no investment occurs; this is simple cashflow juggling. Someone I work with gained £12000 on it in under a month - now everyone wants in the act. But (and I've pleaded with these people) the participants don't seem to appreciate the sheer idiocy of such schemes. Their attitude is "my husband goes to the betting shop, it's just my bit of fun". In the end, if you gain money, you're taking it directly from another participant. This is exploitation of people (normally hard-up, heavily mortgaged parents, it seems), is morally wrong and should be illegal - but it isn't in the UK. Here's a link to a BBC feature on pyramid schemes (aka trading schemes). This really boils my piss, but it carries on because individual participants can benefit from the fraud themselves. I understand women are targeted in this case as men are more likely to get in fights when they realise they've lost large amounts of cash.
posted by boneybaloney (18 comments total)
A similar gag collapsed the economy of Albania not long ago. Perhaps this is evidence that England has finally become a third-world country.
posted by Faze at 10:25 AM on May 3, 2002

"Women Impoverishing Women"
posted by malevolent at 10:28 AM on May 3, 2002

"my husband goes to the betting shop, it's just my bit of fun".

there's something a little bit weird about english people and statements like this, i can't quite put my finger on it.
posted by rhyax at 10:34 AM on May 3, 2002

The same kind of scam happened in the U.S. recently. It was in Maine, where these things are illegal: A Women's Project. The state's attorney general is suing.
posted by SteveInMaine at 10:40 AM on May 3, 2002

Actually, I don't find that justification of it particularly obnoxious. It's an upfront admission that the whole scheme is a gamble: if you are lucky -- and early into the scam -- you can make some money; if you're unlucky and late, you're going to lose. Basically a 100-pound bet that there are people dumber than you...
posted by five fresh fish at 10:42 AM on May 3, 2002

around here, they venerate this sort of thing.
posted by quonsar at 10:47 AM on May 3, 2002

I remember reading this in the Guardian which has an article from last summer regarding how the govt is "considering legislation" against it.

So that's sorted then...
posted by selton at 11:06 AM on May 3, 2002

Pyramid schemes have long been illegal in the US. When I was a kid, someone on our street bought a garage-full of soap as part of one of the origianl schemes. He eventually went to jail for tax evasion, as well. Probably unrelated to a scheme where he lost tons of money.

I find it hard to believe that these well-known scams, that have been around for more than 25 years are not illegal in other countries.
posted by rich at 11:11 AM on May 3, 2002

Actually, I don't find that justification of it particularly obnoxious.

Really? I'm not sure which argument you're referring to, so here's a refutation of both:

The "men bet, so we bet, too" argument- organized, commercial betting pits the individual against a company. To be sure, that company's money comes from other losing individuals, but they're all operating independent of you. It's conceivably possible for all the individuals to win. There's also some give-and-take inherent in it (sometimes you win, sometimes you lose). These pyramid schemes are inherently zero-sum. You can't turn around and ask the person who suckered you to cough up money.

The "we know it's a scheme" argument- sorry, I just don't buy into that. If people really knew, then it wouldn't happen. The odds are so incredibly stacked against you beyond the first couple tiers, and the people who tend to buy into these things don't understand that math.
posted by mkultra at 11:26 AM on May 3, 2002

A pyramid scheme with the same name happend in Missouri.

This site is dedicated to Pyramid Scheme awareness.
posted by MaddCutty at 1:19 PM on May 3, 2002

The difference between pyramid schemes and betting is that in pyramid schemes the first couple tiers will get their money and the last ones won't. There's really no gamble involved - once the money starts to run out, it's up to the people who just missed the cut off to try and push new people to sign up, knowing full well that they (the new people) will never see return on their investment, since they're being pushed to join in hopes of getting just that last "almost" tier the money they've been waiting on so long.

People just don't grasp the nature of exponential expansion. Whoever starts these clubs has to convince 8 peope to give up $5000 on the premise that collectively they can convince 64 people to give up $5000, on the premise that collectively they can convince 512 more people to give up $5000, on the premise... etc. By the third tier it already looks pretty bad.

Gambling, on the other hand, explicitly states what your odds are. It's true that sometimes the odds are inexact, as in betting on a horse race or basketball game (unless you're betting on numbers not victory) but they're still given, and your return is greater when you take greater risk. This is not true of pyramid schemes.

As for the "people should know better" argument, we simply can't make laws on the assumption that all citizens are adept statisticians. All scams rely on being able to dupe people, which is why they are illegal. Some people would never get taken anyway, because they've heard about tricks before, because they do the math before they get emotionally attached, because they know there's no such thing as a free lunch, etc. But the laws are there to protect people who are convinced by friendly charismatic people instead of rational deliberation, or who follow their hearts instead of their heads, or whatever: yeah, they made a mistake, but it shouldn't be the right of the clever & greedy to manipulate and deceive the trusting...
posted by mdn at 2:28 PM on May 3, 2002

quonsar, Amway survives because it isn't strictly a pyramid scheme, but multi-level marketing. In the end you can make money just selling the products -- it's just that it works better for the folks up top if they can also get you to invest in the seminars and the recruitment materials and .. and .. and ...

Pyramid schemes seem to go through phases -- every few years they peak in a craze, though rarely as massive as Albania's. Egypt in 1999, Brunei in 2001. It's always the same story, alas.
posted by dhartung at 4:01 PM on May 3, 2002

Commercial betting is negative sum for the individuals, thats just the way it is. And in order for some people to win, others lose.

If you ask me, this is just a more efficent system.
posted by delmoi at 4:52 PM on May 3, 2002

amway seems more ponzi then pyramid.
posted by clavdivs at 6:10 PM on May 3, 2002

Although it appears to be a run-of-the-mill pyramid scheme, what's especially sickening about this particular operation is how it's presented as women helping women, when what you're really doing is the exact opposite: find a new sucker to pass the debt to.

I'll betcha the top tier consists entirely of men.
posted by thijsk at 4:30 AM on May 4, 2002

> amway seems more ponzi then pyramid.

And Grand Rapids seems more of a Fonzi scheme.

> a run-of-the-mill pyramid scheme

That puts a peculiar image in my mind.

Anyway, pyramid schemes typically catch people who wouldn't understand why it's wrong even if you explained it to them slowly, and most would waste the money on lottery tickets or the like (other things they don't understand*) if they didn't see "opportunities" like this first. It's probably best to outlaw them (pyramid schemes and lotteries), but people always find other hopeless ways to throw away their money.

* People who have a "system" that they think works to their advantage for picking lottery numbers (and most of them do) don't understand the mathematics of the thing.
posted by pracowity at 4:54 AM on May 4, 2002

pracowity - People who have a "system" that they think works to their advantage for picking lottery numbers (and most of them do) don't understand the mathematics of the thing.

Actually, there are legit systems that work to your advantage, but only by decreasing your odds of sharing a jackpot, not by increasing your chances of winning.

Of course the best system is to deposit the ticket money into an IRA.
posted by NortonDC at 6:23 AM on May 4, 2002

If I go to the racetrack, or the betting shop (I live in the US, but I've been to Britain, and you can find a bookmaker on any high street), I risk my money--but my winning or losing doesn't depend on dragging eight friends along to give me their money.

All these pyramids are based on dragging your friends in, and most of the people in them will find themselves having to explain to friends or family what happened to their money.

Or, okay, you're a decent person, so when it falls apart, you give your sister and her hairdresser back the money they gave you. But you're still out what you gave the person above you on the pyramid.

What it comes to is, would you ask five or eight or 24 friends or acquaintances "Give me a hundred pounds, and then go ask your friends for a hundred pounds each, to pay you back"? If I need to ask my friends for money, I'll do so--but I won't pretend that it's an investment, any more than I thought it was when I lent money to a friend who was down on his luck.
posted by rosvicl at 9:33 AM on May 4, 2002

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