Don't think that only wealthy investors are potential victims of Ponzi and pyramid schemes. The average consumer is just as vulnerable, and maybe even more vulnerable. The garden variety Ponzi scheme is nothing more than a chance to take your money. You pay $500 or $1,000 or $10,000 for the "opportunity" to get involved in the scheme, and then you are expected to recruit others who will pay in similar amounts. If you can find enough victims, you might get your initial "investment" back, plus "profits" on top of that.
Those "investment" dollars sound small, but in today's tight economy, it's not chump change for many families. Here are some tips I offered on CNBC's On the Money to help consumers identify investment Ponzi schemes.
And check out this video for some other key phrases used to help identify Ponzi schemes and business opportunity scams.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »