Pyramid schemes and chain letters

Money collection cannot be based on chain letters or pyramid schemes. In other words, chain letters and pyramid schemes cannot be used to collect monetary donations or virtual currency.

Pyramid schemes

Pyramid schemes are a way of recruiting members by a promise of earnings or profits all or some of which materialise through payments made by others who join the scheme later down the line. These payments can be joining fees or other recurring or non-recurring contributions.

Pyramid schemes are often made to look like legitimate operations, such as trading, investment or insurance activities. Pyramid schemes promise great returns, typically by omitting information about, for example, the risks involved. 

In normal trading, payment and the goods or services received in exchange are timewise, quantitatively and qualitatively proportionate to each other. In other words, the buyer gets something worth money in return for the money that they pay. In normal trading potential buyers do not have to fear false claims of there not being any risk or baseless promises of huge returns.

Pyramid schemes often promise benefits that will not materialise for a long time. The benefits are also dependent on payments made by others who join the scheme later down the line. This means that the scheme only works for as long as new people keep joining. If no new people get involved, there are no returns.

Unintentional participation in pyramid schemes

People who join pyramid schemes are known to have certain personality traits in common. These include a longing of excitement, optimism and gullibility, as well as high financial risk tolerance. The desire to belong to a small, privileged group of people who possess unique inside information that appears “wrong” to outsiders is another pull factor. This desire combined with a belief in a system that promises to generate large amounts of money to the participants can blur people’s judgement.

Some people are lured into joining pyramid schemes by recommendations of their friends and family. In addition to potential legal consequences and financial risks, participating in a pyramid scheme can therefore have a significant negative impact on important relationships.

Collecting monetary donations or virtual currency through pyramid schemes is forbidden. Pyramid schemes are also illegal in other countries. EU regulations condemn setting up, operating and promoting pyramid schemes as inappropriate conduct. 

Chain letters

Chain letters are communications in which recipients are promised monetary rewards or financial benefits if they pass the letter on to others. In addition to traditional letters, chain letters can also be sent, for example, by email or as text messages. Recipients can be asked to transfer money or virtual currency to existing members of the chain. 

Earnings are based on payments made and letters and messages forwarded by others who join the chain later down the line. The earnings structure can be based on steps or tiers. The payments can be portrayed, for example, as joining or participation fees. The participants receive no tangible goods or services in return for their payment, only a promise of financial benefits. Chain letters are not a form of traditional trading.

Collecting monetary donations or virtual currency through chain letters is forbidden. Money collection campaigns that are run in the form of a chain letters are prohibited. 

Asking recipients to forward money to existing members of the chain is likewise prohibited.

What should I do if I come across a money collection campaign that appears to be based on a pyramid scheme or a chain letter?

If you suspect that you have been approached to join a pyramid scheme or to participate in a chain letter or another form of illegal money collection, you should contact the National Police Board’s Gambling Administration department. You can use our feedback form or email us.
Our contact information is available on this website. 

If you believe that you have been a victim of a crime, you should contact the police.

More information about pyramid schemes is also available on the website of the Finnish Competition and Consumer Authority.