Seems like Nigerians never learn, despite the loss and heartbreak caused by MMM and other ponzi schemes, many are still signing up for a new one tagged “Loom Money”. This is happening despite the Federal Government’s warning through the SEC that the platform is not safe and disaster awaits its participants.
Loom money is a peer to peer network scheme just as MMM was, it involves participants looking for more participants to join so that they can get paid. The new participants also look for new participants to join so that they can as well get paid and so on.
To join loom, you will need to invest N1000, N2,000 or N13,000 and the platform promises a value 8 times the amount you pay as returns within a very short time, about 48 hours – this alone should raise your suspicion.
How Loom works and why it is not safe
The Loom pyramid uses colors to differentiate levels as you can see in the image above. There are four levels represented by red, orange, blue and purple. The person at the red is the owner of the pyramid i.e the first person that signs up on it. Whoever comes next gets into the orange level and pays the person in the red level. Once the orange level fills up, the next signees enter into the blue level and so it goes until the pyramid is filled up.
Once the pyramid gets filled up, the group splits such that new groups are created the same process repeats. Whoever gets into the red level then begins to look for new participants in order to get paid. Once there are no new participants to join the pyramid, the group collapses and those who are yet to be paid lose their money.
With this, you should know a scheme such as Loom is not good place to invest because there is no guarantee that you will get anything. It depends only if new participants come in and those new participants also need to be paid too. One day for sure, there will be no new member to join, what then happens to all the new participants who just joined. Even if you do get paid from the platform, you are expected to invest again with an even higher amount than the first so as to get more.
Loom Money has no online website or portal so everyone engaging in it is doing so at their own risk. New participants are usually recruited in Facebook and WhatsApp groups which they join via invite links. Once there is any problem, the owner of the group simply deletes it and if necessary, blocks all participants from contacting him.
Ponzi schemes are not safe so I advise you as a Nigerian to stay off it; they are labeled as scam and fraudulent by the Financial Services Regulation Coordinating Committee (FSRCC). Loom Money is no different from MMM other than the fact that MMM had an online platform where people could at least register an account. If MMM could do what it did, then Loom would do worse.