in Bermuda of so-called pyramid schemes, also known as multi-level marketing, network or matrix marketing plans.

From a consumer information standpoint, let's review what these plans are and what they are not.

What they are not: The statement has been made that you can invest in pyramid schemes because "they are just like a mutual fund''.

This is not true! Mutual funds are owned and operated by well- known, legitimate companies. Mutual fund companies are also subject to heavy regulation, accountability standards and scrutiny by the securities' commission of each country they operate in. In most instances, the companies must have consumer investor protection insurance of some kind.This insurance protects the consumer investor in the event that a legitimate company fails due to fraud carried out by its management team. Investing in a mutual fund gives you a right of ownership and a percentage of the shares in the fund.

Pyramid schemes do nothing of the kind.

Pyramid schemes work like this: The operators of these schemes often locate their customers through trade shows; telephone solicitations; television, radio, and print advertisements; and now even the Internet. If you are a newly "downsized'' worker, suddenly in possession of a large severance package, you are also a prime target. As a lure, the operators tell the prospective purchaser that interest by the public or a specific market niche is very high and that the window of opportunity will very soon close. Very often, they promise "a chance to buy in on the ground floor before the stock goes public etc''. These promoters pressure investors to make a quick decision and hand over their money. Many victims of these scams sell first to their friends.

Plans such as these that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. When the supposed moneymaking opportunity goes belly up, most lose not only their money -- but also their friends.

Other schemes similar to pyramiding target the self-employed with get-rich-quick operations that promise exclusive territories and money-back guarantees. Many victims are assured that they will receive marketing assistance and that income is guaranteed to exceed the purchase price of the franchise, equipment, or software. But after they have paid, too often the eager investor learns that any training they have received is useless, the equipment or software necessary to conduct their new business does not work, supposedly secure leads produce no business, there is no 24-hour "hotline'' to answer their questions, and guarantees are nothing but words.

What they really are: Multilevel marketing plans, also known as network, pyramid or matrix marketing plans, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you will receive commissions -- for both your sales of the plan's goods or services and those of other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributor's "downline''.

Why is pyramiding illegal? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited.

And when a plan collapses, most people -- except perhaps those at the very top of the pyramid -- lose their money.

This is not solely a local issue. Doing research on these pyramid schemes turned up the following: In Romania, some four million people (50 percent of the population) took part in a pyramid investment scheme that collapsed in 1993.

In 1994, thousands of Russians invested in a stock pyramid scheme and ended up losing their life savings.

On the Internet Fraud Watch, launched by the US National Consumers League, pyramid schemes were rated the number one scam in 1996. The number of people who reported these frauds on the Internet has reached more than 3.5 million per year.

No one can tell you whether a particular multilevel marketing plan is legal.

Nor can they give you advice about whether to join such a plan. You must make that decision yourself. However, it is suggested that you use common sense, and consider these nine tips when you make your decision: 1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.

2. Beware of plans that ask new distributors to purchase expensive inventory.

These plans can collapse quickly -- and also may be thinly disguised pyramids.

3. Be cautious of plans that claim you will make money through continued growth of your "downline'' -- the commissions on sales made by new distributors you recruit -- rather than through sales of products you make yourself.

4. Beware of plans that claim to sell miracle products or promise enormous earnings. Just because a promoter of a plan makes a claim doesn't mean it's true! Ask the promoter of the plan to substantiate claims with hard evidence.

5. Beware of "decoys''. These are people who are really paid by a plan's promoter to describe their fictional success in earning money through the plan. A decoy may be someone you know.

6. Don't pay or sign any contracts in an "opportunity meeting'' or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or lawyer.

7. Do your homework! Check with your Consumer Affairs Bureau of Government (292-1681) about any plan you're considering -- especially when the claims about the product or potential earnings seem too good to be true .

8. If you feel that you have been cheated, call the Division, report to the police (as many have done) and talk to a trusted licensed professional advisor. An ethical advisor will give you honest, independent, objective advice.

9. Research all of your investments carefully. You can consult with any number of licensed professional financial advisors here in Bermuda. David Bolden, CEO of Emerald Financial Group, feels "that every consumer interested in investing should do their research, consult with a trusted financial advisor, then make an informed investment decision''. Why not get a second or third opinion? You have a right to make the best decision possible for your hard-earned money! Martha Myron CPA, CA is a Bermudian and a licensed (Series 7 NASD) Senior Financial Advisor with First Bermuda Securities. The opinions expressed in this weekly column are her own. Questions and comments about this column may be sent to her at 295-1330 X 241 or e-mail mmyron yfbs.bm WEBSITES National Consumers League: www.nationalconsumersleague.org and www.nclnet.orgBetter Business Bureau: www.bbb.org