DePaul University Career Center's Blog

Identifying Pyramid Schemes

By: Gracie Covarrubias, DePaul University organizational and multicultural communication major ’18 and Career Center communications assistant

In a world full of incredible and exciting employers, there will always be a few that don’t fit the bill. A perfect example are employers who participate in pyramid schemes. A pyramid scheme is a fraudulent business model that requires employees to recruit and invest in a company in order to see a return on their investment. Pyramid schemes are illegal but this doesn’t stop companies from operating and recruiting students. It’s important to understand the signs of a pyramid scheme both for your personal safety and for the safety of your wallet. Make sure these warning signs are on your radar.

Details on what service they’re offering are murky

Any legitimate employer will be able to offer you a detailed description of what the position entails. Before applying to any job, you should have a relatively clear idea of the roles and responsibilities. Employers who are vague about their services should raise an immediate red flag. If you’re in contact with a recruiter it’s critical that you ask what services are offered and what role you’ll play in that. If they can’t answer your questions, or say that they’ll only tell you in person or at a special info session, this is a good sign to get out quick.

You’re required to invest your money up front

If an employer is requesting your bank account information or credit card number, run the other way. A tell-tale sign of a pyramid scheme is a start-up cost or an initiation fee that requires you to buy into a product. These employers will tell you that you need to spend money to make money. Legitimate jobs won’t ask you to invest money this way. Now, let’s say you missed this warning sign. If you have given a scammer your credit card information, contact your bank immediately, close the account, and dispute the charges.

They want immediate access to your address book

When it comes to pyramid schemes, your income is typically based upon the amount of people you recruit as opposed to the amount of product you sell. While any job can encourage you to promote a product or services to friends, family and other colleagues, there is a fine line between promoting to and exploiting. If your job title isn’t “recruiter” you shouldn’t be spending the bulk of your time trying to onboard your friends and family.

You’re promised instant success

One of the biggest appeals of pyramid schemes comes from their highly publicized rags-to-riches stories. These companies will highlight a few key employees who worked their way up. They’re described as “hard workers” who reached some sort of “platinum level” and now own a brand new car as a result. Remember, there is no get-rich-quick gimmick that works—if you’re being promised $20,000 for 10 weeks worth of work without any formal training, you’re getting played.

The bottom line when it comes to pyramid schemes? Do your research. A simple Google search offers you insight into a company’s culture, their history and public perceptions of them. The DePaul library has put together a resource guide to help make your employer research easy. Have you done your research and are still struggling to determine if a company if legit or not? Check out our tips on identifying fraudulent employers for more information.

If you encounter any suspicious activity—on Handshake or otherwise—please be sure to notify Kate Dalin (, the Career Center’s associate director of employer engagement and on-campus recruiting. If you or your friends do become victims of a pyramid scheme, contact DePaul’s Student Legal Services for further guidance and support. Please also consider reviewing the Federal Trade Commission’s resources for navigating and reporting job scams, and filing a complaint report with their agency.

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