Loom Money Nigeria, is taking over social media by luring young Nigerians to participate in a pyramid scheme and invest as low as N1000 and N13,000 and get as much as 8 times the value of the investment in 48 hours.
The Loom Pyramid Scheme is not new to the world. Last month, Daily Mail UK reported that the scheme has resurfaced online all over the world, with different names such as ‘loom circle’, ‘fractal mandala’ and ‘blessing loom’. In Nigeria, its central name is Loom Money Nigeria with individuals creating their own WhatsApp groups such as Preye Loom, Catherine Loom among others.
How Loom Works In Nigeria?
According to one of the WhatsApp groups, the Loom scheme pyramid level is in four places and represented by colours – Purple, Blue, Orange and Red.
“Each time 8 people join the group, the person in the centre (usually on the red spot) gets the target amount which is N16,000 and after investing N2,000 leaves the spot for the next person.
“The Loom would then be split into 2 groups, the top half and the bottom half each becomes new groups and everyone moves into the next level.
“Which means those people that were in purple move to blue, those in the blue move to orange, and those in the orange move to red (the final stage and the cashing out stage).”
“Loom Money Nigeria promises a staggering easy cash reward of N104,000 for paying N13,000 or N2,000 for N16,000,” the Facebook post reads with a link to a closed WhatsApp group.
Why It Is Dangerous
Loom has no major promoter and operate on the social media via closed groups on Facebook and WhatsApp. Its system is also porous as anybody can create a group either on Facebook or WhatsApp, lure people to pay and shut them out afterwards.
In most instances, the Loom promoter is the only Admin and make judgement on the outcome of the pyramid structure.
Also there is clear cut defined terms and conditions – the only known condition is for people to bring in cash and well as eight other contributors before cash out.
How is it illegal?
Any organisation and financial scheme without necessary regulatory approval is illegal and can be sanctioned by the government in Nigeria.
According to the SEC in Nigeria, Ponzi Scheme includes unregistered investments, unlicensed sellers, secretive and complex strategies.
Last year, the Securities and Exchange Commission (SEC) cautioned the citizens to desist from investing their money in Ponzi schemes that are proposing return levels that are unreasonably high.