In case you think you’re the only one who doesn’t know what a pyramid scheme is, you’re not alone. Results of a February 2009 survey conducted by the National Consumers League (NCL) revealed that 33% of respondents were unable to identify a pyramid scheme as a scam when it was described to them. Not good news, considering that 31% of respondents said they’d consider having a home-based business. Pyramid schemes are often disguised as legitimate home-based businesses.

Low-income Americans could be especially vulnerable: 39% of respondents with annual incomes less than $35,000 were unable to identify a pyramid scheme as a scam, the lowest percentage of any of the income groups surveyed. These same respondents were also the most likely to consider a pyramid scheme a good source of supplemental income when it was described to them (42% versus 33%). African Americans (46%) and Hispanics (48%) were more likely than average (31%) to consider a home-based business because of the economy. African Americans (48%) and Hispanics (35%) were also less likely than average (33%) to identify a pyramid scheme as a scam.

The results have led consumer advocates “to issue a warning that fraudulent pyramid schemes disguised as legitimate business opportunities are posing a greater threat than ever to consumers’ wallets and financial health,” according to the NCL. The organization has launched new pages at its Pyramid Schemes Web site that offer tools aimed at helping consumers spot and avoid risky business “opportunities.”

Pyramid schemes have existed for more than a century and in a bewildering array of guises, according to the NCL. These schemes tend to share common elements, such as a focus on recruitment of new members and promises of unrealistic or “guaranteed” returns.

Pyramid scheme operators have been trying to make their scams look like multilevel marketing (MLM) opportunities through the sale of dubious products or services with little or no established market. Legitimate MLM businesses, or “networking marketing,” are legal. They offer goods and services through independent distributors, and the focus of the business is on sales of products, not the recruitment of new business members.

The survey involved 1,006 Americans and took place February 12-15, 2009.