So, did you get a message saying “Cash App Me $100 to receive $800 ” or something to that effect? When you tried to call it a scam, the person likely either 1) swore it’s not a scam or 2) used an image like the one below to explain why it is “legitimate”?
Are you still confused after seeing that image? Well, you should be, but let’s try to break this down so you are better equipped when you see that message from now on.
What is it?
- Blessing Loom is the name of this game to obtain your money. You pay money to join, and the goal is to get others to pay and join too. Once someone fills the loom with paying recruits, then the person in the center (or at the top depending on your loom shape) receives their $800. They just have you recruit to fill the loom. In order for someone to GET PAID, you MUST recruit others to join. Seems easy, right? You can definitely find seven folks who will buy in but can those 7 folks find 7 is the question you should be asking? You can do anything you put your mind and effort into. There is no doubt there. And it can last for a while at least.
- Sounds too good to be true, huh? That’s because it is. It is called a pyramid scheme
- What is a pyramid scheme?
- They are considered illegal in most jurisdictions because they start with an initial recruiter who takes the “top” of the pyramid and then he or she recruits more people who start at level-1 members and rise up to level-2 after they recruit a certain number of members. For example, someone got your $100, and then told you that to get more money you just need to convince “x” number of people to pay you $100. Those recruits just have to do the same to keep the money flowing. This is usually the part where a red flag should be going off. What if you never convince “x” number of people? Thus, you never get paid back, and that other person is now $100 richer. When you run out of “new recruits,” the truth comes out. You have just been scammed. Some initial investors never receive a payout. That is the reality and criminal activity that is occurring. People are being tricked out of their money essentially.
- The pyramid will eventually reach an unmanageable level and then all the new recruits will dry up which will make many new “investors” very unhappy.
- What is a pyramid scheme?
- Sounds too good to be true, huh? That’s because it is. It is called a pyramid scheme
What Red Flags Should You Look For ?
- It’s probably a scam IF:
- They use “easy money quickly”as a tagline
- You can’t seem to explain what product or service you selling to others
- The number of recruits determines if you receive maximum payout
- It is a Free Gift Program/Recruitment Club
- Common Names of these kinds of scams include:blessing bank, infinity loom, snowflake blessing, giving circles, sister exchange, and fractal mancala
- ALTERNATIVELY, there are legitimate and legal businesses that seem similar to this category, and they are known as Multi-Level Marketing Models.
- Have you heard of Herbalife or Mary Kay? Well, if you have, those are examples of Multi-Level Marketing Models and those are considered legitimate because you are ultimately selling products for maximum income.
- HOWEVER, do not let cash app scammers or other pyramid schemers tell you that what they are doing is a MLM because THAT IS NOT TRUE!
WHAT DOES THE LAW SAY?
- In some states, like Texas, those participating in pyramid schemes like this one can face up to two years in prison and up to $10,000 in fines.
- This has held true with various states including:
- Alabama, who just proposed two bills addressing pyramid schemes in March 2020
- Virginia officials, who have said anyone who participates could be guilty of a Class 1 Misdemeanor
- New York says these schemes are doomed to fail because their success depends on the ability to recruit more and more investors
- Arkansas says if you’re messaged about joining a loom, don’t respond
- This has held true with various states including:
- The Better Business Bureau (BBB) states that participation puts you at risk for a) losing money, b) being arrested, and c) cashapp or other payment apps being hacked.
- The Federal Trade Commission (FTC) gives a great tip for people to “beware of any plan that makes exaggerated money claims.”
- The Cornell Law definition explains that pyramid schemes are marketed as “foolproof.” I can tell you that is false. It sounds very tempting, but it will not help everyone. The recruits will dry up. These scams prey on vulnerable people looking to feed their families and though you can get $800 from these schemes, participation in them is illegal in various jurisdiction. So why risk it?
In sum, most people, never see their money again. We are more aware now than before, and there is even a meme culture that makes fun of scams like these.
However, why do you think people still fall victim to these scams?
Sometimes it is due to not knowing better, but EASY MONEY is such a new desirable trend today. However, you can take that same $100 and invest it in starting your first business and make that $800 profit the legal way, and all you have to do is get out of that mindset that “easy money” is better than running your own business for profit. I bet you have so many business ideas floating in your head.
Why not start creating your legitimate business NOW?
During COVID-19, we have countered some scary times, and we hope you are staying safe, but this is YOUR TIME to take that amazing idea and make it happen. I started my law firm the month after passing the bar, and I was FRIGHTENED because I had little savings and no job or prospects. I was also stuck at home without pay for over a year post-graduation, but I turned the $80 I made in my first year into a five-figure business. No one taught me how to start this business, and I was so happy to find help along the way. Maybe that’s your story too and you just need some help with starting? I can say that becoming my own boss was the most powerful and affirming decision in my life. So I say to start that firm, sis! Open that shop, brother! YOU CAN! WE CAN!
FINAL TIP: Don’t get locked up trying to turn $100 into $800. You have better odds of turning water into wine using YouTube tutorials. This cash app scam might just turn your $800 “profit” into jail time and hefty fines. You don’t need that “easy money,” you need to start that legitimate business.
MORAL OF THE STORY: Don’t be fooled: if it’s too good to be true, it is not FOR YOU!
The above is not legal advice. Should you need advice on forming a business entity, trademarks and copyrights, criminal defense matters, family law disputes, and estate planning concerns, call an attorney at Neena R. Speer Law Firm LLC.
Neena R. Speer Law Firm LLC. is a Birmingham, AL boutique firm focused on the individual and their needs from areas ranging from LLC/Business Formation to Copyrights, Trademarks, Contract Drafting/Review to Criminal Defense, Estate Planning and Family Law.
Call today at 205-490-8068 or email.
