The latest term in pyramid scheme scams is “LOOM”. This new scam’s origin can be traced back to the United Kingdom, where it started and was later spread into Australia and parts of Africa through social media. – Is LOOM Really A Scam or Not?
According to Scamwatch, they have been receiving complaints about LOOM scams since early February this year. So far they have recorded a total of 128 reports which sums up to a total of $7,600 (an equivalent of GH¢40,736.) lost as a result of the LOOM scam.
This scheme seems to target young people, luring them with promises of making quick money through the use of social media. Per reports by ACCC, 5% of the people who reported were between the ages of 18-24 and 34% between 25-34 years old.
The scheme spreads through social media networks such as Whatsapp, Facebook, Instagram, Twitter among others. 63% percent of people who reported to Scamwatch says they were invited to join the scheme through social networks or online forums.
How The LOOM works
The victims might hear about it through friends or family on a social media platform. They’re told that transferring $300 to a specified ‘loom’ account, and recruiting eight others to do the same, will mean they’ll see $2,400.
Victims are told that they’ll move closer to the middle of a ‘circle’, where their ‘hierarchy’ will rise alongside the money they’ll receive.
But, arranged another way, the whole thing looks suspiciously pyramid-like.
Of course, victims rarely get the promised $2,400 and end up losing the money they gave.
How to spot a LOOM or similar pyramid scheme scam
Anytime you notice any of the signs below you should know it is a scam and stay alert to avoid them;
- An offer to join a group and to recruit other members to make money
- The involvement of goods or services, like information sheets, that seem to have doubtful or make little sense and only serve to promote the scheme
- The person introducing you to the scheme isn’t able to fully explain how it works
- Claims such as “this is not a pyramid scheme” or “this is totally legal”
Protecting Yourself From Being Scammed
To prevent yourself, family and friends from being scammed, keep the following in mind;
- Don’t let anyone pressure you into financial decisions: get independent financial advice
- Be wary of schemes or products that claim to guarantee a return
- Consider if the rewards you’re promised depend on sales. Are the products of real value? Are they sold at a reasonable price? Is it something there’s actually consumer demand for?
- Family and friends can try to involve you in a scheme without themselves realizing it’s a scam
- Above all, it’s against the law to promote or be involved in a pyramid scheme.
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