Social media has become one of the most important aspects of everyday living in the United States. Each day, there is a myriad of interaction through streams such as Facebook, Twitter, and Instagram, allowing “friends” to take a peak in one’s current state. Social media has also been used increasingly for advertising. In fact, for a fee of your choosing, Facebook and Twitter gives one the opportunity to “boost” a current status or event, giving more of your friends and other account members a greater ability to see it. While social media is normally used to interact with others, which actually puts the communication needle in a positive direction, it can also be used to propagate malicious financial schemes.
Known as a “pyramid scheme,” Investopedia explains that this occurs when something is built with a “Top-Down Business Model,” where one illegally invests a scam based on a shaky foundation. It is initiated by an individual or company recruiting investors with promises of high returns. The sales rarely involve real products or valid services, and becomes a recurring cycle of recruiting others to pay into a future promise of something. When the recruiters trickle down to the bottom, the pyramid scheme collapses, and many are left losing money, and a significant amount of it on occasion.
One of the newest versions of this fall under the recent get-rich-quick model called the “Blessing Loom.”
Specifically targeted to lure people in to gain a quick buck for the holiday season, its promise makes an avid social media visitor greatly tempted to succumb to the “guarantee” it delivers. However, it is unlawful and should not be in operation.
On November 30, the State of Utah Department of Commerce sent out a press release alerting everyone to stay away from the scam.
“According to the Federal Trade Commission (FTC), reports of this gifting pyramid scam surfaced years ago. The FTC has classified these types of promotions as classic pyramid or ‘Ponzi’ schemes where the new customers buy in money is used to profit the older customers so people are given the illusion of profits through new payouts. The scam keeps circulating in the hopes of snaring new victims to pay older members. If no one else buys into the ‘Blessing Loom’ or other pyramid schemes, the original members lose all their money in the classic ‘robbing Peter to pay Paul’ scenario.”
Jobs & Hire reports that the method of this scheme is that Facebook users are promised an $800 payout if they can refer two other people into the “Blessing Loom” and deposit at least $100.
Robin Fitzgerald of the Sun Herald breaks it down even more.
“A Blessing Loom offers the chance to win $800 for a one-time payment of $100 using a PayPal account. Your name fills a space outside the loom, and you’re told to recruit others to fill in the other spaces. Once you advance and it’s your turn to be in the center, you receive the money. Or so the scam claims.”
Mississippi Attorney General Jim Hood reveals why it continues to circulate on social media, stating that “The only reason… is because the people who have paid money into a scheme are desperately recruiting others in hopes they can get their money back.” A resident in this state who gets caught participating can also be subject to a $500 fine and up to six months in prison.
Leada Gore of Alabama.com also explains how this scheme can terminate someone’s Facebook account if caught participating, as this state also has strict regulations regarding pyramid schemes.
Violating any of these terms of service could result in a user’s access being terminated. The Facebook Terms of Service warn that “if you violate the letter or spirit of this Statement, or otherwise create risk or possible legal exposure for us, we can stop providing all or part of Facebook to you. We will notify you by email or at the next time you attempt to access your account.”
It is essential for someone to make sure that something so alluring passes any kind of fact-check clearance, especially so close to the holiday season. If not, one is subject to lose money, just like many others. A social media pitch with such a rapid and sudden return should always be viewed with caution. If not, it could terminate one’s Facebook account, or even lead to time in prison.
[Featured Image by Amir Ridhwan/Shutterstock]