Abstract: The characteristics of a pyramid scheme consist of paying benefits based on the increase in the number of participants in the scheme or the increase in the contributions made by the participants in the scheme. Forming a pyramid scheme requires only one prerequisite. Even though pyramid schemes have one or two characteristics, people find it difficult to identify a pyramid scheme with a legal investment opportunity. The knowledge gap in identifying a pyramid scheme has led the public to become victims of a pyramid scheme. Knowledge of pyramid schemes in a country will provide insight for policymakers to draft policies accordingly to prevent people from becoming victims. Given that the characteristics of a pyramid scheme remain the same across countries, the knowledge gained in pyramid schemes can be shared among policymakers in different countries, more generally to draft national policies and precisely to secure the financial system stability of the country.

Problem statement: What are the dynamics behind pyramid schemes that cause people to fall victim to those schemes?

So what?: Undoubtedly, laws should be in place to prohibit pyramid activities, but on the same note, the public should also be empowered with financial literacy to identify pyramid schemes. Pyramid schemes can be considered a transnational crime, and when analysing their characteristics, it can be observed that across the world, the characteristics of a pyramid scheme remain the same.

New Ways

The topic of pyramid schemes has been in discussion for decades, however, people still fall victim to said systems. Beyond intellectual curiosity, it leads to understanding why it has become necessary for a government to be proactive when it comes to pyramid schemes. On the same note, for a government to be proactive, it needs to understand the characteristics of pyramid schemes and how these schemes are promoted among the general public. To provide a background note on pyramid schemes, the Albanian experience from 1996 to 1997 has been taken as an example. When discussing pyramid schemes, the Albanian experience is highlighted because the nominal liabilities pyramid schemes had created were more than half of the country’s Gross Domestic Product (GDP).[1] With the Albanian experience, it can be concluded that if the rise of a pyramid scheme is unattended, the negative impact that may have on the country is unfathomable.

During 1996-97, a dramatic rise was reported in the number of pyramid schemes in Albania.[2] A pyramid scheme cannot be created and maintained if there is no demand for such a scheme. When analysing how pyramid schemes grew in Albania, it was reported that there was a demand for credit in the country, and fraudsters took this opportunity to create an informal credit market with family ties.[3] This informal credit market was developed due to the unfamiliarity of the financial products offered by the formal financial market and the deficiencies in the formal financial system.[4] This may not be the only cause of the rise in pyramid schemes in Albania, but what is important is that there should be a demand for money. When countries are going through a recession, a transition of an economy from a government-controlled economy to a market-driven economy, a pandemic, or a post-pandemic situation, there may be a demand for money. This demand is caused by the country’s socio-economic factors. When there is a demand for money in society, fraudsters take this opportunity and introduce different schemes to address the demand wrongfully.

The next question is: when there is a demand for money, how do fraudsters create pyramid schemes to attract the general public or circumvent the characteristics of a pyramid scheme? Since the socio-economic factors of the country create a situation where the public demands money, these pyramid schemes should be able to attract participants by paying a higher return within a short period of time, which is otherwise not available with the formal financial sector, such as banks and finance companies. Further, it needs to investigate whether the same pattern has been used to attract participants over the years or if there has been a shift in the nature of pyramid schemes. To understand these questions, Sri Lanka has been taken as an example. In Sri Lanka, there has been a rise in pyramid schemes and approximately eighteen schemes have been determined to be prohibited.[5]

When there is a demand for money, how do fraudsters create pyramid schemes to attract the general public or circumvent the characteristics of a pyramid scheme?

The Context

Empirical studies reveal that pyramid schemes have been a problem for countries worldwide. Therefore, this paper examines whether the characteristics of a pyramid scheme vary country-wise or remain the same.[6] A few examples have been taken to identify the characteristics of pyramid schemes: the United Kingdom, the United States of America, and Sri Lanka. In the United Kingdom, pyramid selling has been described by the Competition and Market Authority as follows: “Participants in a scheme are financially compensated by other people paying into the scheme rather than by the selling of a product or service. They depend upon new members being recruited to pay in, rely upon members promoting the scheme to their family, friends, and colleagues, and fall apart…”.[7] Similarly, the Federal Trade Commission in the United States of America describes pyramid schemes as scams. It further states that “promoters of a pyramid scheme may try to recruit you with pitches about what you’ll earn. […] Often in a pyramid scheme, you’ll be encouraged or even required to buy a certain amount of product at regular intervals, even if you already have more inventory than you can use or sell.”[8]

Sri Lankan law has also used characteristics similar to those of the United Kingdom and the United States of America to define a pyramid scheme. As this research is based on the pyramid schemes promoted in Sri Lanka, the legal definition given in the law of Sri Lanka has been considered. The word pyramid has not been used in the statutes, but the characteristics of pyramid schemes have been defined under the name of prohibited schemes. In terms of the Sri Lankan Banking Act,[9] the pyramid scheme has been defined as follows:

“No person shall directly or indirectly initiate, offer, promote, advertise, conduct, finance, manage or direct a scheme where a participant is required to contribute or pay money or monetary value and the benefits earned by the participants are largely dependent on

(a)    Increase in the number of participants in the scheme; or

(b)   Increase in the contributions made by the participants in the scheme.”

Overall, pyramid schemes have been identified similarly across countries. Given this backdrop, it is relevant to explore how pyramid schemes have been promoted in Sri Lanka and whether the characteristics of pyramid schemes are made available to the general public during the said promotion campaigns.

 

A Pyramid Scheme

As mentioned in Sri Lankan law, pyramid schemes largely depend on the increase in the number of participants in the scheme or the increase in the contributions made by the participants in the scheme. Then, it needs to understand how these schemes operate at ground level. The operation of a pyramid scheme at ground level consists of the manner in which the benefits are given, the number of layers present in the scheme, how the scheme is promoted, and who is promoting the scheme. In a pyramid scheme, the benefits given to the existing participants are generated from the money brought into the system by the new entrants or the contributions made by the existing participants. The existing participants are compensated from the money or investments brought into the scheme by the new entrants. Therefore, pyramid schemes are structured so that more participants are in the bottom layer, and as the layers move from bottom to top, the number of participants in each layer becomes less. The scheme’s name is “pyramid” because the number of participants or contributions made at the bottom line should always be larger than the top layers that create the mathematical shape of a pyramid. On the other hand, it can be argued that if the contributions made by each participant in the bottom line are high, then the pyramid structure can be maintained with fewer people than the top line. The volume and value of money shape the pyramid scheme rather than the participants.

In a pyramid scheme, the benefits given to the existing participants are generated from the money brought into the system by the new entrants or the contributions made by the existing participants.

In a pyramid scheme, the participants in each layer are connected vertically and horizontally to form this mathematical shape. When the number of participants or investments increases at the bottom layer, as described earlier, the money will flow from the bottom to the top, where the top people receive money without selling any product or service. As such, logically, it can be argued that in a pyramid scheme, there is no necessity to maintain a horizontal connection between participants, but it is a must to connect participants vertically to enable the flow of money from bottom to top. On the other hand, it can also be argued that if the vertical chain breaks, the participants connected to the chain may not receive benefits. As mentioned earlier, there is no necessity to maintain a link horizontally, but when participants are added to each layer horizontally, the benefits received at the top layers get higher. Further, the structure of the pyramid scheme can be predetermined. The person/s initiating a pyramid scheme may have determined the money flow in advance. To explain further, the person who designed the pyramid scheme has the discretion to determine the number of layers that receive benefits when a new person enrols in the scheme and the percentage of the benefits given out of the investment in the system. For example, a person can design a pyramid scheme where benefits flow only to three layers. The same or different percentage of benefits can be given in each layer. On this premise, it is observed that the number of vertical and horizontal layers at the pyramid is decided at the inception. Still, the participants at each layer are decided based on how the system has been promoted among the general public.

Pyramid schemes cannot operate without bringing money into the system. When a pyramid scheme opens for business, it is insolvent because its liabilities outweigh its assets. To circumvent the nature of a pyramid scheme and attract customers, pyramid schemes are designed so that, with new entrants entering the system more precisely regarding investment in the system, the money invested is distributed among the upliners. When no new entrants exist, the scheme cannot be sustained, and ultimately, the participants are defaulted. To overcome the risk of a lack of investments, promoters of the pyramid scheme spread word of mouth about the huge returns to encourage more people to become interested. When more people become interested in the scheme as a result of the high payouts, which, in some circumstances, encourage showcase investments and extravagant spending by operators or promoters, fraudsters get the opportunity to earn money, or in other words, proceeds of crime.

When a pyramid scheme opens for business, it is insolvent because its liabilities outweigh its assets.

Therefore, the necessary condition to maintain the pyramid scheme is to bring money into the system. To attract money into the system, it needs to convince the public or potential investors that higher rewards will be given for their investments. Participants are encouraged to indulge in extravagant spending by the operators or promoters; however, out of the larger number of investors, higher rewards were given to very few people. The publicity given for these rewards has fostered the participants’ hope that they would also be rewarded in a particular scheme. In this context, participants may remain calm, hoping to receive high payouts.

Next, it needs to understand how pyramid schemes are promoted. Pyramid schemes are promoted similarly to multi-level marketing. Therefore, it is common for people to confuse pyramid schemes with multi-level marketing. The differences between multi-level marketing and pyramid schemes have been elaborated in a simplified manner by government websites such as the Federal Trade Commission in the United States of America and the Competition and Markets Authority in the United Kingdom, which refers to the fact that in a multi-level marking, there will be transactions followed by the sale of a product. A commission is given to the seller based on the sale volume. In pyramid schemes, the seller needs to purchase the product and then sell it to a new participant, but the main intention is to gain profit rather than sell the product. Therefore, the product’s price may be exorbitant, and the product may not be freely available in the market, nor is there a demand for the product in the market.[10] On the other hand, in multi-level marketing, the participant is only an agent of the company. In contrast, in a pyramid scheme, the participant is the end user, who needs to buy the product before promoting it to another person.

When pyramid schemes are promoted, there should be a mechanism for the public to identify pyramid schemes through multi-level marketing. If the public could identify the mechanism of a pyramid scheme, they would not have fallen victim to it. Similarly, if the government could identify a pyramid scheme, then the government may also intervene and take appropriate action in a timely manner. This highlights the need for collaborative public and government action to differentiate a pyramid scheme from multi-level marketing. To this extent, the public and the government need to identify the features that may appear in pyramid schemes but not in multi-level marketing. Unlike multi-level marketing in a pyramid scheme, the participants need to link vertically and/or horizontally, which enables the scheme to flow money from bottom to top. Hence, there should be a mechanism to collect data from the participants and connect them accordingly (vertically and horizontally), whereas this requirement may not appear in multi-level marketing. This research is deployed to understand how personal data is collected to construct a pyramid and to ascertain whether the general public has an idea why their data has been collected.

If the public cannot identify why personal data is collected, there is another option to identify a pyramid scheme by looking at the benefits. Another characteristic of identifying a pyramid scheme from multi-level marketing is that in multi-level marketing, the benefit received by the promoters may be at the same rate. Still, in a pyramid scheme, the benefit is varied according to the layer where the person is placed in the pyramid scheme. In a pyramid scheme, if a new entrant invests money in the system, the immediate person vertically placed above the new entrant and a few others connected as upliners to the new entrant receive money. This characteristic can be identified through the benefits given to the participants. Pyramid schemes are not like other schemes (investing money in fixed deposits and sovereign bonds), where an investor invests money and does not engage in further activities. In a pyramid scheme, participants are compelled to actively participate in promoting the scheme. Hock and Button divide the participation of the pyramid scheme into two limbs.[11] The first limb is named ‘the participant dominant,’ while the second is named ‘the organiser dominant.’

In a pyramid scheme, the benefit is varied according to the layer where the person is placed in the pyramid scheme.

Two Limbs

As stipulated by Hock and Button, in the participant-dominant scheme, the participants need to invest and recruit others to join the scheme if they want to earn benefits. When a person invests money in the scheme, is it mandatory to recruit more, or can that person stay inactive in the system? Pyramid schemes are designed in such a way that if a participant needs benefits, it is a requirement to promote more; otherwise, the participants need to invest more money in the scheme. The second limb is referred to as organiser dominant, and in this scenario, the organisers hunt for vulnerable groups and also increase investors by pressure groups.[12] The said targeted groups include social media influencers,[13] celebrities,[14] friends or relatives. This group also includes people from poorer socioeconomic backgrounds, as they are vulnerable to pyramid schemes, given their lack of enthusiasm. The common feature of these targeted groups is that they have a customer base or are easy to convince. Therefore, through the target group’s reach, the pyramid scheme organisers may deliver the scheme to a larger community.

Finally, it needs to understand who promotes pyramid schemes. Generally, pyramid schemes are promoted using the existing social networks of family and friends.[15] Recruiting people through the social network or from the same cluster is advantageous.  When a fraudulent scheme ceases to operate, a participant may remain silent, be reluctant to complain, and tend to solve the problem with the same network.[16] Delivering a pyramid scheme through a specific group is more effective, as a relative or friend is less likely to be suspected of giving misleading information or acting dishonestly than a corporate representative.[17] Stacie Bosley and Maggie Knorr state that the promotion campaign is changed according to the targeted group: religious, ethnic or professional. For example, when targeting religious groups: the promoters often use religious language, texts, or prayers to attract the audience.[18] The promotion campaign is integrated into the target group without creating suspicion among the targeted group members.

The Data Set

To identify the characteristics of a pyramid scheme, data was collected from five schemes that have been determined to violate the provisions of the law. The target audience of these five schemes was Sri Lankans, but it was observed that some of the schemes were initiated in foreign countries. These five schemes have been promoted between 2023 and 2024 through online platforms such as YouTube and Facebook. For this research, the pyramid schemes that have been promoted through online platforms have been selected because, through online schemes, it was easy for the fraudsters to address a large audience. The existence of the schemes was ceased either by the operation of the law or by themselves. As a part of this research, data has been collected under four themes. Firstly, the data was collected to identify the prerequisites for entering pyramid schemes. Secondly, the data has been analysed to identify how the pyramid schemes have been promoted among the general public. The analysis followed the pyramid scheme’s mode of transaction. Finally, it was evaluated why people are attracted to these schemes.

The pyramid schemes that have been promoted through online platforms have been selected because, through online schemes, it was easy for the fraudsters to address a large audience.

Prerequisites to Enter into Pyramid Schemes

To understand how fraudsters reach the public was identified through online schemes. The said online schemes are user-friendly and freely available to the public. Anyone can download an app available at the Google Play Store or Apple Store to join the scheme. To proceed further, the participant needs to provide the credentials of the person who introduced the scheme. Since the scheme was introduced by a friend, relative, or a known person, the participant may have known this information, or it is easy to obtain. When schemes are promoted by social media influencers, they provide their credentials while doing the demonstration. In such a situation, the participant needs only to fill in the relevant questions with the given answers. The credentials of the person who introduced the scheme may not always be directly requested. Out of the five schemes reviewed for this research, it was observed that the credentials of the existing participants were given in many forms. In two schemes, credentials were given as promotion codes or codes, where the new entrant needed to enter these promotion codes or codes to join the scheme. In another two schemes, a link was sent by a person who is already a participant. The new entrant has to join the scheme by clicking the link, and once the new entrant becomes a member of the scheme, the said person will also receive a link that can be shared with others. The only prerequisite to joining the scheme is to provide the credentials of the introducer of the scheme, which is easy to fulfil.

Methods of Operating the Pyramid Scheme

Whether the online schemes are initiated nationally or internationally, these schemes are promoted through companies registered with the respective authority that is authorised to register companies. Irrespective of the country of registration, the certificates of incorporation are displayed on the websites. Although the certificates are displayed publicly, the authenticity of the documents is questionable. By registering with the respective authority, the fraudsters try to give an impression of legitimacy to the (shell)companies and their business activities. While doing so, the companies try to disguise the characteristics of a pyramid scheme. Three of the five schemes were initiated in three foreign countries, and two were initiated in Sri Lanka. All five pyramid schemes that were subject to this research have been incorporated. By registering a company, the company is bound to carry out legal obligations such as filing annual returns. However, the longevity of these companies remains less than a year; therefore, fraudsters do not worry about filing documents or complying with legal obligations.

The purportedly registered companies promote online schemes as business ventures or investment opportunities, either directly or indirectly. According to the research findings, in one scheme, it was advertised that participants were given online education on how to trade, and while learning, they could earn a profit. In this scheme, the public was misled by promoting educational packages on online trading. Similarly, in another scheme, charity work was promoted, but to earn money for charity work, the participants needed to do online trading. With the data available on social media and web pages, it was deemed that fraudsters propose that the public engage in online trading. In one way or another, online trading was the main activity in the schemes examined.

The Mode of Transaction

To operate a pyramid scheme, the money needs to be transferred into the system. Accordingly, the next step was to consider whether the transaction mode would provide insight into an investment’s legality. In all five schemes, the mode of transaction was virtual currency, and it is interesting to know that the options to do transactions with virtual currency in Sri Lanka were limited. This raises the question of why Sri Lankans tend to invest money in virtual currency when options for investing in virtual currency are limited. All the investigated schemes asked the participants to invest in virtual currency. Hence, to participate in these pyramid schemes, the participants need to transfer fiat money to a virtual currency. Although several virtual currencies are available, such as Bitcoin, Litecoin, and Ethereum, in all five schemes, Tether (USDT) was proposed by the fraudsters. Maybe the underlying thinking of the fraudsters is that the participants will not notice the difference between USD and USDT. To understand the background knowledge on the legality of virtual currencies as a mode of payment, this research also explored the legality of using virtual currencies within the country. According to the provisions of the law, the Central Bank of Sri Lanka has the sole right and authority to issue currency in Sri Lanka.[19] As the authority, the Central Bank of Sri Lanka occasionally issued press notices to the public stating that cryptocurrencies are not acceptable as legal tender.[20] Further, the press notices mentioned that cryptocurrencies are unregulated in Sri Lanka and lack the regulatory safeguards to secure payments and minimise high volatility. Suppose the participant cannot understand the difference between the USDT and USD to the extent that they represent two different modes of transactions. In that case, the awareness given by the Central Bank will be futile, as the public may not know that they are dealing with virtual currency, so they need to be vigilant with their transactions.

Benefits

Finally, the information related to benefits was collected to analyse whether such information led to any suspicion of a pyramid scheme. When analysing the data related to the pyramid schemes, it was observed that, through a single investment, the participants were entitled to several benefits that may not be available in legal investments. According to the research findings and data available on social media and webpages, in all the schemes, participants were entitled to receive a daily profit or interest based on the investments they had made in the system. In these pyramid schemes, the daily income was mostly named as ‘daily profit or interest’. Daily profit or interest characteristics are similar to interest accrued in savings or a fixed deposit in the formal financial sector. However, receiving the daily interest may vary according to the scheme’s terms of reference. In some schemes, participants receive profits on all days of the week, while in other schemes, daily profit or interest is limited to weekdays. Receiving a daily profit may not create suspicion as legal investments are also available.

When analysing the data related to the pyramid schemes, it was observed that, through a single investment, the participants were entitled to several benefits that may not be available in legal investments.

Apart from the daily profit or interest, the pyramid scheme participants were entitled to direct and indirect commissions. The characteristics of direct and indirect commissions were available in all five schemes, but the names given to such commissions were varied. According to the information available on social media and webpages, a direct commission was given when a participant introduced a new entrant to the scheme, and the new entrant invested money in the scheme. The available information further stipulates that, in addition to the immediate upliner, a certain percentage of the money invested by the new entrant in the system will be disbursed among those linked to the upliner. The said commission is referred to as an indirect commission. The web pages of the pyramid schemes showed that introducing a participant to the scheme did not indicate that the introducer or others would receive benefits. On social media, it was stressed that participants must invest money in the system so that the upliners could receive direct and indirect commissions. The new entrant was motivated to invest money in the system and introduce more participants into the system with the promise that he or she would be entitled to more benefits, namely daily income, and direct and indirect commissions.

When a person invested money in the system, three people connected to the new entrant would get commissions or benefits. As illustrated in the above diagram, the person immediately connected to the new entrant received 20% as a direct commission, while the other two people would receive 10 and 5 per cent, respectively, as indirect commissions. The number of layers and the amount given in each layer are predetermined, and the amounts given may be lucrative to attract more people and money into the system.

In the pyramid schemes that were analysed, it was observed that the percentage given as direct and indirect commissions would vary depending on two factors. Firstly, the commission depended on the amount of money invested by the new entrant. Secondly, the commission depended on the position of the recipient. For example, the recipient in a higher position or level may have received more money than those in lower positions. In contrast, in some schemes, an equal amount was given as indirect commission across the layers, and in some, the percentage varied depending on the participant’s layer. The percentage given as an indirect commission was always lower than the direct commission. The characteristics of direct and indirect commissions denote that in a pyramid scheme, participants need to actively participate, either by introducing new people into the system or investing that person’s own money into the system. The characteristics of direct and indirect commissions reveal features that the public can grasp to determine whether a certain scheme is legal or illegal.

Bringing Money into the System

With the recent rise of pyramid schemes in Sri Lanka, it raises the question of why people cannot understand the characteristics of pyramid schemes or, on the other hand, whether promoters of pyramid schemes find new ways to disguise their fraudulent intentions. With the findings of this research, it is evident that pyramid schemes were promoted through digital platforms, such as social media and Facebook. When promoting through digital platforms, it is easier to address a large audience than in person. With digital encroachment, the whole presentation of a pyramid scheme has changed, and virtual currencies have been used as a mode of transaction. When selecting the virtual currency, the fraudsters were also careful to select a currency spelt close to a hard currency. As stated previously, notable instances include the USDT and USD. Although the promoters of pyramid schemes try to intermingle pyramid schemes with multi-level marketing, which also has similar promotion methods, the pyramid schemes still have unique characteristics, such as indirect commission. Also, with a single payment, the participants were promised a number of returns that were not available with the legal investment. With the research findings, it is envisaged that the basic features of the pyramid scheme remain the same. Still, the scheme is sugar-coated with educational packages, investment opportunities, and online education. With a higher payout and many more, the participants are convinced they can achieve a desirable lifestyle. The desire for a lucrative life may lead to finding victims of pyramid schemes even nowadays.

Although the promoters of pyramid schemes try to intermingle pyramid schemes with multi-level marketing, which also has similar promotion methods, the pyramid schemes still have unique characteristics, such as indirect commission.

This research aims to draw attention to the characteristics of pyramid schemes to prevent more people from becoming victims. When a scheme is presented, the participants need to consider a number of characteristics: whether the company is incorporated or has no returns of investment, the requirement to enter the details of the existing participants, and the requirement to actively participate in the scheme to receive benefits. It may be difficult for a government to intervene at the initial stage of a pyramid scheme as most of these schemes are promoted by word of mouth among friends, relatives, and known persons, but knowing the characteristics of pyramid schemes assists the government in raising awareness among the public to be vigilant if any of these characteristics are present in a proposed scheme. To prevent people from becoming victims the government and public are equal partners as they should collaborate on a higher level to prevent pyramid schemes. While doing so, the government secures the financial system’s stability at the macro level.

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Noragal Dasni Lakmalee Hemchandra holds the following titles: Attorney-at-Law, LLB, and a Master’s in Economics and Public Policy from the University of Queensland, Australia. Her research interests are money laundering and terror finance. Previous works by her include an article on FATF standards, The Financing of Terrorism and the Characteristics of Terrorist Groups, The International Standards on Countering the Financing of Terrorism, What We Know About Self-Financed Terrorism, Implementing Anti-Money Laundering Laws: Challenges for Law Enforcement Authorities, and National Risk Assessment on Money laundering and Terrorist Financing: Lessons Learned. The views contained in this article are the author’s own and do not represent the views of the Central Bank of Sri Lanka.

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[1] C. Jarvis, “The Rise and Fall of Albania’s Pyramid Schemes,” Finance and Development 37(1): 1-4, https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.simonemariotti.com%2Fdownloads%2FPapers%2520finanziari%2FJarvis.doc&wdOrigin=BROWSELINK.

[2] Idem.

[3] Idem.

[4] Idem.

[5] Central Bank of Sri Lanka, “Participating in Pyramid Schemes is a Punishabke Offence,” Press Notice, August 24, 2023, https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/notices/notice_20230824_participating_in_pyramid_schemes_is_a_punishable_offence_e.pdf; Central Bank of Sri Lanka, “Participating in Pyramid Schemes is a Punishabke Offence,” Press Notice, April 22, 2024, https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/notices/notice_20240422_participating_in_pyramid_schemes_is_a_punishable_offence_e1.pdf.

[6] Idem.

[7] Competition and Markets Authority, “Pyramid selling: advice for the public and communities,” June 10, 2024, https://assets.publishing.service.gov.uk/media/5a7dde59ed915d2acb6ee9f3/Pyramid_selling_advice_for_the_public_and_communities.pdf.

[8] Federal Trade Commission-Consumer Advice, “Multi-Level Marketing Businesses and Pyramid Schemes,” June 10, 2024, https://consumer.ftc.gov/articles/multi-level-marketing-businesses-pyramid-schemes#pyramid.

[9] Banking Act, No. 30 of 1988, June 10, 2024, https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/acts/en/BankingAct30_1988.pdf.

[10] Federal Trade Commission-Consumer Advice, “Multi-Level Marketing Businesses and Pyramid Schemes,” June 10, 2024, https://consumer.ftc.gov/articles/multi-level-marketing-businesses-pyramid-schemes#pyramid.

[11] B. Hock and M. Button, “Why do People Join Pyramid Schemes?,” Journal of Financial Crime, May 01, 2024, https://www.emerald.com/insight/content/doi/10.1108/JFC-09-2022-0225/full/html.

[12] Idem.

[13] Time, “Pandemic Schemes: How Multilevel Marketing Distributors are using the Internet and the Coronavirus to Grow Their Businesses,” May 30, 2024, https://time.com/5864712/multilevel-marketing-schemes-coronavirus/.

[14] Idem.

[15] S. Bosley and M. Knorr, “Pyramids, Ponzi and Fraud Prevention: Lessons from a Case Study,” Journal of Financial Crime 25 (1): 81-94.

[16] Idem.

[17] Idem.

[18] Idem.

[19] Section 44 of the Central Bank of Sri Lanka Act, No. 16 of 2023, https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/laws/acts/en/central_bank_of_sri_lanka_act_2023_e.pdf.

[20] Protecting the Public from Crypto Investment Scams, January 14, 2024, https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/notices/notice_20240114_protecting_the_public_from_crypto_investment_scams_e.pdf.