The narrative changes, the story remains the same. As the world smartens up, so does the fraudsters and schemers. One of the most popular scams that are repeated, and used all over the world is the Ponzi scheme, named after Charles Ponzi in the 1920s. A Ponzi scheme is a scam that uses investment from new investors to pay off copious returns to old investors. It is similar to a Pyramid scheme but different as a Pyramid scheme relies on new customers to recruit new customers.
When a friend of mine recently told me about his side hustle, I became curious. I had always dreamt of owning a side hustle. My friend would not give me any details. At first, I thought he was being evasive and did not want to share his good fortune with me. After I coxed him, he let the cat out of the bag. He told me that he is in business development. He still refrained from telling me either the name of the company or what exactly he does for the company, which piqued my curiosity.
After a couple of days, he told me that his company was looking to expand and was looking to incorporate more people. He asked me whether I would be interested. I thanked my lucky stars that the days of owning a side hustle were nigh. Little did I know my so-called friend was part of a pyramid scheme.
He connected me on a zoom call with his partners and the founder of the company without sharing any details about the company even though I insisted vehemently. During the call, he first introduced me to one of the partners who also had experience working abroad. Both of them starting singing praises of the founder of the company. They told me how the guy changed their lives and is a mentor and a guide to them. I started looking forward to talking to the founder. And then my friend mentioned that this business was so lucrative that I would be able to earn around USD 130,000 (a fortune in India) in a year by committing 10 hours or so in a week. I thought to myself, Kriti, day to retire has finally arrived. A side hustle, not at all. This business would be the defining point of my life. Although something seemed amiss, the green pastures were too beautiful to be a skeptic. My gut knew that this was a load of bullshit, but my stupid brain wanted to believe.
When the co-founder joined in on the call, I could see how he had charmed my friend and his colleague. This guy was charming, assertive, and an excellent communicator. The meeting went on for 2 hours, and it did not have a single dull moment. But the real kicker was none of them could tell me what went on in the business. According to the business pitch, the company had an exclusive dealership right for various organizations, and they made a profit through this. As a person from a business background with an MBA degree, I wanted to know the nitty-gritty of the proposed business, but these guys could not give me a clear answer.
At the end of the call, the guy told me that the initial investment for this business was approximately $5000. I enquired if this was an investment on my part? He would not give me a clear answer and told me that they have everything set up. I further enquired that if they did not need the money for setting up, then where would the $5000 go? He avoided giving me a straight answer and started repeating the pitch. And that was the moment my brain confirmed what my gut was telling me all along. These guys were trying to rope me into a pyramid scheme. They needed my money desperately.
After the call, I checked in the LinkedIn and Social media profiles of every person who participated in the meeting and other people they claimed to be in association. There were pictures strewn across various social media platforms of these guys partying in Dubai and expensive resorts in India. Some of the team members had written entrepreneurs on their social media profiles, but they had not mentioned the name of the business. Most of the social media profiles of these guys did not even suggest that they had a side hustle.
I did a little more digging. I still could not find the name of the business or anything remotely related to it. The next day my friend called me and asked me if I was thinking about it. I told him that due to the current economic situation, I do not have the cash to invest. I asked him how much money did he invest when he joined the company. He told me that his initial investment was to the tune of $5000 and later more than $15000. He mentioned that the more you invest, the more money one can make. $15000 is a lot of money in India. The funniest part is if my friend was right, according to the business pitch he told me, he must be making more than $130000 in a year, a fortune in India. If it were true, then why the hell he was slogging at his day job that paid him peanuts in comparison.
Key takeaways –
- Quick rich schemes that promise copious returns are a fallacy. You will end up losing money.
- Biggest red flag – Failure to disclose the name of the company and refusing to share the website of the company claiming it was locked.
- Asking for huge money upfront and asking you to commit within a few hours of the meeting. (Dude, FYI I am not a descendent of either Midas or Scrooge McDuck that I am rolling in money).
- Usually, your friends and family are the ones who introduce you to schemes like these (either intentionally or non-intentionally).
It is easy to become a victim of quick-rich schemes. We have to be always on our guard to save our hard-earned money.