08 May 2019: Yet another Ponzi scheme has engulfed Nigeria, taking the social media by storm, and this time is luring young Nigerians in their massive money making scam.

This scheme is miles ahead( in a horrible way) of the infamous MMM. They basically lure the Nigeria youth to invest as low as N1000 and N13,000 and receive 8 times the value of the investment in 48 hours.( Stock market and Treasury Bill investors are laughing! if only you could octuple your money in 48 hours). 

“In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business,” the SEC explains.

The blessing of the Loom Pyramid Scheme isn’t new to the world. Last month a UK newspaper reported that the scheme has resurfaced online all over the world, with different names such as 'loom circle', 'fractal mandala' and 'blessing loom'. In Nigeria, its central name is Loom Money Nigeria with individuals creating their own WhatsApp groups such as Preye Loom, Catherine Loom among others.

How are they conning people?

Interestingly, the scammers have put in a lot of thought to this, creating a Loom scheme pyramid level, which is in four places and represented by colours - Purple, Blue, Orange and Red.

"Each time 8 people join the group, the person in the centre (usually on the red spot) gets the target amount which is N16,000 and after investing N2,000 leaves the spot for the next person.

“The Loom would then be split into 2 groups, the top half and the bottom half each becomes new groups and everyone moves into the next level.”

"Which means those people that were in purple move to blue, those in the blue move to orange, and those in the orange move to red (the final stage and the cashing out stage).”

In a Facebook post the promoter explained that “the more people you manage to add to the circle, the quicker the movement of it, and thus, the easier it will be for you to make your money.”

“Loom Money Nigeria promises a staggering easy cash reward of N104,000 for paying N13,000 or N2,000 for N16,000,” the Facebook post reads with a link to a closed WhatsApp group.

Investigations across WhatsApp platforms showed that one of the promoters of the scheme on Facebook opened his social media account late 2018 and turned a Facebook page opened for 2019 Nigerian Election into a Ponzi scheme.

Why Loom is more treacherous than MMM

MMM, which was legit in its own twisted way, actually has a website, system information and key person- Late Sergey Mavrodi as the major promoter. On the other hand, Loom has no major promoters( with real identity) and operate via closed groups on Facebook and WhatsApp. Its system is also porous, which means any Tom, Dic and Harry can create a group either on Facebook or WhatsApp, lure people to pay and shut them out afterwards.

Mostly, the Loom promoter is the only Admin and the one to make judgements on the outcome of the pyramid structure.

Also there is clear cut defined terms and conditions(if only!) - the only known condition is for people to bring in cash( ofcourse!) and well as eight other contributors before they receive their purported return.

Any organisation and financial scheme without the necessary regulatory approval is illegal and can be sanctioned by the government. According to the SEC in Nigeria, Ponzi Scheme includes unregistered investments, unlicensed sellers, secretive and complex strategies. 

The Nigerian government’s position on Ponzi scheme

Despite multiple warnings, Nigerian citizens, mostly young people on social media, still fall for the Ponzi scheme.( We wonder if octupling your money in 48 hours doesn't ring an alarm in someone’s head)

Nigerian Citizens need to strictly desist from investing their money in Ponzi schemes that are proposing return levels that are unreasonably high.

Reporting for EasyKobo on Wednesday , 08 May 2019 in Lagos, Nigeria