The dangerous loom pyramid scheme sweeping the internet and targeting youths in Ghana of free money is a scam - EOCO
The Economic and Organised Crime Office (EOCO) has cautioned the public to desist from investing and patronizing the unlicensed investment scheme known as Loom. EOCO in a news release described Loom as a scam, adding that it is a "pyramid scheme disguised as something new".
The dangerous loom pyramid scheme craze sweeping the internet and targeting youths on Facebook with promises of free money is a scam.
"The Economic and Organised Crime Office has for some time now been monitoring the new trend of investment online called LOOM," the release said.
"It is a scam and the general public is cautioned to desist from investing and patronizing the Loom. Therefore, anyone who transact business with the Loom does it at their own risk".
Explaining how the scheme works, EOCO said it is targeted at a younger demographic who are more likely to part with money on cyberspace. It adds that the scheme does not trade in any product and is only beneficial for people who get in early.
"The loom sits in a circle and every time a new person is recruited others are pushed closer to the centre of the circle where they are promised a payoff. However, if people are unable to find investors and move closer to the centre of the circle, the last people to invest lose their money".
The Security and Exchange Commission on June 11 cautioned the public against patronising Loom because it is not licensed to operate in the capital market.
Unlike a pyramid, the 'loom' sits in a circle and every time a new person is recruited, others are pushed closer to the centre of the circle where they're promised a pay out, Newshub reported.
However, if people are unable to find investors and move closer to the centre of the circle, the last people to invest lose their money.
There is no actual product coming from the scheme and is only beneficial for people who get in early because every one else pays up the chain.
Despite being marketed towards young people as an easy way to get money, Netsafe CEO Martin Cocker says it's just a pyramid scheme disguised as something new.
the 'loom' is one of the first scams that has been seen to spread successfully on social media targeting young people who won't recognise it as being a pyramid scheme.
'Any scam targeting people through social media is effective, because as you receive contacts from people you know, you lower your guard,'
'It would be pretty easy for a scammer to release a similar kind of programme and release it into social media and see how far it can go.'
Mr Cocker urges anyone who receives unsolicited offers to do their own research before giving their money away.
'If they handed over the money recently they can contact their bank and see if they can reverse it. Realistically it depends on how long it's been,' Mr Cocker said.
Pyramid schemes are illegal in both Australia and New Zealand due to being unsustainable and many people losing money.
Daily Mail Australia has contacted NSW Police and the eSafety Commissioner for comment.