Do you know the new fraud methods?

Ponzi Schemes

A Ponzi scheme, also known as a pyramid scheme, is a type of financial fraud that relies on inviting investors to invest in businesses that do not exist or do not actually exist. Investors are paid returns from the money brought in by new investors, rather than profits from real investments or sustainable business activity.

There are several features that distinguish pyramid schemes (Ponzi):

1. **Unrealistic returns**: Investors are offered unrealistic returns, often significantly and unreasonably high compared to normal investment markets.

2. **Lack of clear details**: A pyramid scheme lacks accurate information or transparency about how profits are generated or the businesses in which they are invested.

3. **Reliance on new investments**: The continuation of the pyramid scheme depends on attracting new investors to pay the returns promised to existing investors, and so on. When a new influx of investors gets involved, the scheme can quickly collapse.

4. **Questionable credibility of the founder or manager**: The founder or manager running pyramid schemes could have a prior record of fraud or unethical behavior in the past.

5. **Bonus scheme for marketers who attract more investors**: Bonuses or commissions could be offered to people who attract new investors to the scheme, encouraging more promotion of the scheme rather than focusing on real investments.

Pyramid schemes (Ponzi) are illegal in most countries, and usually end with most investors losing money when the scheme collapses. Investors should always exercise caution and conduct thorough research before investing in any opportunity to ensure they do not become a victim of fraud or financial risk.

#Write2Earnn