Ponzi get-rich-quick schemes

Ponzi schemes are mostly pyramid selling schemes offered as get-rich-quick opportunities, where the investor is promised a high return while the cash taken from new investors is used to pay the original investors, and the cycle continues. 

Such get-rich-quick schemes are soaring amongst young professionals, and it was found that in 2022, over £890 million was lost in investment frauds. 

Criminals continue to use evolved techniques to get people into bogus investment deals where victims are targeted on social media or through marketing apps. The regulators have warned influencers of the risks of promoting illegal schemes. 

The FCA said the influencers must not assume the followers fully understand what they are promoting. These get-rich schemes may enable a few early investors to make money fast, but once the schemes get popular, the earnings are lost, and you may lose the money altogether.

Such frauds have destroyed individuals and families, while the cost of living crisis continues to make people search for such opportunities, and they face devastating types of fraud, which they accept as a way to get quick financial returns to pay the growing bills. 

How Does It Work?

The Ponzi schemes promise to give a very high up to 50 per cent return. Initially, the money is used to pay huge dividends to the early investors, but then, one cannot yield the desired returns. 

These schemes are marketed through chain referral franchise frauds or multi-level advertisements, where people are made bosses of their level in the pyramid, and they get commissions for marketing the product and bringing more money into the scheme. 

They get a commission to get more investors who recruit other investors. These days, social media influencers advertise the investment scams, and upon seeing the ad, the victim either makes the authorised push payments on the cloned website or enters their banking credentials, which the criminals obtain through social engineering techniques like removing access tools or over the phone. 

The scheme fails when the number of investors bumps up, and the new investors come to know that most of their money has already been taken up by the early investors.

How To Secure Your Money?

Before parting with your money, always do your research and take your time with such a plan. Only those with evil intentions would pressurise you to make a quick decision. 

Take time and consult friends and experts before investing. You should always invest through government-backed institutions that can help recover your losses in case of fraud.

• Be careful if you are asked to pay in cryptocurrency to make a payment, and do not accept offers on social media. 

• Never allow a third party to take control of your phone or computer. 

• The city police have advised people to stop, challenge and protect themselves. If you have fallen for a scam, report it to Action Fraud. Contact your bank immediately and report. 

• Check the registered company list on the government website and avoid schemes that provide enormous returns or those where you are asked to bring more people to the scheme to earn more.

• Contact government advisors at the PIMFA website or other financial authorities to know more.

If you have already invested in such schemes, contact the Consumer Helpline or report the matter on the government website.

Most follow-ups or money offered after you lost the money into such deals target to get more money from you. In case you suspect such scams, inform government consumer helpline numbers.