Mechanisms of Identity Construction among Members of Pyramid Schemes in Iran: A Critical Ethnography

Whereas the emergence of pyramid schemes exerted considerable impacts on people’s lives, up to now, far too little attention has been paid to the experiences of members from the sociological perspective, particularly in non-Western contexts. Therefore, this study illuminates social processes underlying participation in such schemes in a less studied social setting, Iran. This article also critically traces the social and psychological consequences of membership in pyramid schemes. We adapted a critical ethnographic approach, including participant observation of local branch offices, followed by 16 in-depth interviews with the former members of schemes. Our findings suggest that the practices deployed by the schemes lead to the building of social identity, namely, “superhuman,” mainly based on the misinterpretation of the real world. Finding the reality surrounded deliberately contrasted with the firms’ promises, the constructed identity fails, and members lose their social capital.

“Truth,” Lies, and Deception in Ponzi and Pyramid Schemes

The popularity of alternative online investment platforms has become worrisome in recent times. Adopting explorative methodology, this chapter examines the discursive practices of truth, lies and deception inherent in Ponzi and Pyramid schemes through their method of operation, recruitment strategies, products/services and reward system via Bitconnect, OneCoin, and Zarfund – three online-based Ponzi schemes. The study reveals that the greatest deception of Ponzi schemes lies in the high returns they promise to potential investors and the low work requirement. These claims make it difficult for potential investors to make rational decisions before investing. This study recommends that proper evaluation and due diligence – basic financial literacy – be conducted before investing in any AFIP. Alternatively, expert advice may be sort before any financial commitment.

TINDAK PIDANA MENERAPKAN SISTEM SKEMA PIRAMIDA DALAM PENDISTRIBUSIAN BARANG OLEH PELAKU USAHA

The sales system in the form of a pyramid scheme is prohibited in Article 9 of Law Number 7 of 2014 concerning Trade because it can harm the people who are its members. In the pyramid scheme sales system, the concept is almost close to the concept of a multi-level marketing sales system, which creates opportunities for companies by running a pyramid scheme that bills itself as an official multi-level marketing company. This study aims to analyze the positive law on the prohibition of distribution business actors in the application of the pyramid scheme system and about the efforts to overcome criminal acts by implementing a pyramid scheme system in the distribution of goods. This study analyzes the main problems with the scope and identification of the problems through the Normative Juridical Approach with descriptive analytical research. The existence of various forms of driving factors for the development of companies with a pyramid scheme sales system is the characteristic of most Indonesians who want to have large income instantly, with public awareness and law enforcement officials about the dangers of pyramid schemes that are still lacking, so that the distribution of goods with a pyramid scheme system is carried out by If business actors make mistakes or violate regulations from the government regarding pyramid scheme businesses, those who carry out such actions will be subject to sanctions either by fines or imprisonment.

Why are people trapped in Ponzi and pyramid schemes?

Purpose This paper aims to identify psychological factors that influence people to be involved in Ponzi and pyramid schemes. Design/methodology/approach A psychological approach to finance or behavioural finance is applied in this research because of the assumption that human beings are not always rational. The sample consisted of 98 investors in 11 cities in Indonesia who were or had invested in an investment program with a Ponzi or pyramid scheme. The snowball sampling technique was applied. Findings The conclusion is that optimism (emotional bias), confirmation bias, representativeness bias, framing bias and overconfidence (cognitive bias) positively influenced investment decisions related to Ponzi and pyramid schemes. Originality/value The novelty aspect of this research is the implementation of a behavioural finance perspective to answer and express the fascinating phenomenon of Ponzi and pyramid investment schemes.

Epilogue

This chapter summarizes the ethnographic study of pyramid schemes in Albania. It reviews the collapse of the firms and how the economic reforms in Albania have maintained a distinct neoliberal flavor. This postsocialist neoliberal economic order has focused on liberalization and privatization reforms. The chapter looks at Albania's economy that is now rated as an upper-middle-income economy with a few large industries and foreign investments but with the majority of the working force employed in small-and medium-sized enterprises in services, agriculture, and tourism. It analyzes how pyramid schemes, speculative financing in construction, betting cafés, and Ponzi logics of accumulation and investment have become enduring economic forms in postsocialist Albania.