SCAMS BULLETIN Host Jay White is an inactive attorney in San Mateo County, California.

September 27, 2020

PYRAMID SCAMS

Hard financial times are luring more people than usual into money-losing pyramid schemes.

Invitations by names like Blessed Bloom, Gifted Circle or Secret Sister may sound promising.  It could be attractive if you need money.  But it is a get-rich-quickly pyramid scheme.

Pyramid schemes work on the promise investors will receive back a profit on their money.  In fact, money received from later investors is used to pay back money to earlier investors under a false pretense of earned profit. Later investors receive nothing when scammers take the money and the scheme collapses.

The way the scam works is that a person is invited, usually by someone they know, to put in their money and then to find eight other people whom they invite to do the same thing.  They, in turn, must find another eight participants.  And so on.

Each person who “joins” is asked to send money to the person who invited them, usually via an online app, which often makes it nearly impossible for anyone who realizes they’ve been duped to get their money back.

The best way to avoid this scam and other pyramid schemes is to ignore easy-money or get-rich-quick promises, especially those that claim to multiple your money in return for recruiting others to take part.

“Pyramid scheme promoters may go to great lengths to make the program look like a business, such as a   legitimate multi-level marketing (MLM) program,” says the Security Exchange Commission.  But “there’s only one possible mathematical result.”  Financial disaster for all but a few.

You can see the SEC’s general guidance on pyramid schemes here:  https://tinyurl.com/SEC-pyramid

The US Federal Trade Commission advises “Just don’t send money”. http://www.ftc.gov.

ATTRIBUTION:  scambusters.org

                                                                        #