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Holiday Pyramid Scheme Unwrapped

Who’d like to lose hundreds of dollars this holiday season!?! Oh? Nobody? Weird…

If you’re not one of the outliers that just loves losing money, than keep reading, because a new scam has surfaced, and is affecting the masses. This time, it is an online-holiday-gifting scheme referred to as the Blessing Loom.

To take part in the Blessing Loom, Facebook users must deposit at least $100 into a PayPal or Whatsapp account. They’re promised an $800 payout if they can recruit two other people to do the same. But, shockingly, participants are unlikely to receive the timely holiday windfall that they were promised.

The Blessing Loom – also being referred to as a Christmas Wheel, Snowflake Blessing, or Infinity Loom, among other names – is a promotion that consumers are getting wrapped up in this holiday season. The U.S. postal service had referred to these online gifting schemes as “high-tech chain letters,” whereas the FTC lumps them into the ‘Ponzi’ scheme category.

“Whatever it’s called, it’s a pyramid scheme,” said Mississippi Attorney General Jim Hood, adding that the reason scams like these keep circulating on social media is because the people who paid money to buy into them are “desperately recruiting others in hopes they can get their money back.”

In a press release, the State of Utah Department of Commerce urged consumers to ignore high profit offers like these on social media. Before sending money to a program or company, ask questions offline and be alert to tip-offs that could indicate a scam.

A gifting pyramid or Ponzi scheme will typically:

  • Promise a consumer that they will make money with very little effort or investment. Some looms may cost as little as $10 to join.
  • Include a pitch with stories of how many other people have made money from the same venture without providing concrete facts.
  • State that revenue is generated from bringing in new members or friends to buy into the program. While some complicated schemes might provide commissions to members, Jobs & Hire reports that most do not receive the amount they were initially promised. In fact, some lose everything they paid.

Monetary loss isn’t the only potential pitfall of investing in a pyramid scheme like the Blessing Loom. In some states, participation in an online gifting scheme could lead to jail time or hefty fines.

Facebook also isn’t likely to take kindly to one’s participation in these scams. Per Facebook’s terms of service, an individual’s account may be terminated if they are caught participating in “unlawful multi-level marketing, such as a pyramid scheme.”

Just be careful out there this holiday season. We at Consider The Consumer have already written on a ton of these holiday schemes, and we’re only in the middle of it all currently. If you have any questions or comments, or would like to tell us about a scheme we haven’t caught yet, do us a favor and shoot us an email at considertheconsumer.com, or reach us through our contact page!

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