Some Nigerians are ever so eager (if not desperate) to make money, regardless of whether it is through legal means or illegal means. This explains why quite a number of them fall prey to ponzi schemes.
Following the launch of the latest ponzi scheme in town called Loom Money Nigeria, many have thrown caution to the wind as they rush to partake, forgetting recent the drama and bitterness accompanied the collapse of MMM.
What is loom Money Nigeria?: Loom Money Nigeria is the latest Ponzi scheme in the country. Nairametrics understands that it is a peer-to-peer pyramid scheme that follows the same pattern as the now defunct MMM.
How loom functions: The ‘loom’ sits in a circle and every time a new person is recruited, others are pushed closer to the centre of the circle where they’re promised a payout.
There are four levels in Loom and they are: Purple, Blue, Orange, and Red. Immediately, eight persons joined the programme, the person in Red (centre) qualifies to get his target amount and and can leave. Then, the loom will split into top half and bottom half as the circle begins again.
Basically, the higher number of people you add to the Loom, the quicker the movement for you to withdraw your initial investment.
However, if people are unable to find investors and move closer to the centre of the circle, the last people to invest lose their money.
Below are the step-by-step procedures of Loom Money;
- You are invited/lured to join by either friends, relatives, colleagues, etc.
- You are then asked to invest either N1,000 or N13,000, with promises that you will earn eight times the initial amount when your circle is complete.
- After “investing”, you are then required to invite more people.
- You must be aware of the four steps earlier mentioned.
- The more people you add, the sooner you get to “cash out”.
Is loom real?: While people who are into this Ponzi scheme have proofs to show as evidence of payments to lure new people into this platform, it is pertinent to note that Loom Money Nigeria is not a sustainable investment, neither is it legal.
The impending doom: Practically, you pay to get involved in a Ponzi scheme. Loom Money Nigeria relies on “you” to recruit other people to join up and to part with their money just as you did.
In order for everyone in the scheme to make profits, the supply of new members is expected to be unending. Each Whatsapp group or other social media platforms is expected to be growing with new members to make the kind of money Loom Money Nigeria is promising.
Therefore, should some members fail to keep up with the commitments expected of them to get their expected returns, the amount of money coming into the scheme will ultimately dry up; causing people to lose their initial investments just as it was the case with MMM.
The tragedy: Loom Money Nigeria is dangerous and the end result is expected to be tragic. This is because by inviting your friends and family members to join the platform in order for you to cash out, you are basically scamming them.
Essentially, you’re scamming your family and friends because it is your immediate circle that you are the Ponzi scheme onto — it’s basically like transferring money around to different people until the people at the bottom of the get eventually gets screwed.
Quick reminders: A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Ponzi schemes typically deceives victims into believing that profits are coming from product sales or other means, as they remain unaware that other investors are the source of funds.
According to the Central Bank of Nigeria (CBN), despite the harsh economic climate, Nigerians, as at December 2016, threw about N12 billion away to Ponzi schemes such as the popular but now defunct MMM.