You might have heard a lot lately about the ‘Loom’ pyramid scheme. It’s caught the attention of watchdogs, and they’re concerned.
Since the beginning of February, Scamwatch has received more than 100 reports of the scheme that have resulted in more than $7,600 lost.
It’s also a scheme that seems to target young people, with nearly half of those reporting the scheme aged 18-24 and 34 per cent aged 25-34, according to a spokesperson from the ACCC.
The scheme spreads through social media, with 63 per cent of people saying they were contacted through social networks or online forums.
How it works
The victim 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.
What to look out for
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”
How to protect yourself
The ACCC recommends keeping the following things in mind to ensure you don’t fall into the scam:
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 a consumer demand for?
Family and friends can try to involve you in a scheme without themselves realising it’s a scam
Above all, it’s against the law to promote or be involved in a pyramid scheme.
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