Pyramid schemes are frequently responsible for large losses, with many people falling for the promise of quick financial success in what appears to be a simple process at first glance.
Digital, affiliate and network marketing, sales, beauty and cosmetics, finance and investment, entertainment, and sports betting are just some of the schemes available. While cases differ in terms of how they are carried out and the amounts lost, a common thread revealed strategies commonly used by scammers.
Because such schemes can have a negative impact on one’s finances and well-being, it is critical to be able to recognize when you are being duped. It’s also worth noting that some schemes are legitimate, and these pointers are only meant to help you spot potential red flags.
In Kenya, the following are signs of common pyramid schemes:
- To earn money, you must recruit others. Many Kenyans reported falling victim to schemes that promised large sums of money in exchange for convincing others to join. Such schemes are frequently centred on marketing and promotion rather than products and services. In some cases, they received a few small payments that encouraged them to invest more money in the schemes before the payments dried up, with little explanation provided. Others were not as fortunate, as they received no payments after their initial investment.
Earnings were based on payments made by recruits to join organizations, which was a common thread in these pyramid schemes.
- Unnecessary add-ons are expected to be paid for. Many of the schemes required members to pay different fees to remain members of the organizations. Payments are sometimes requested and are often made abruptly. In certain cases, the payments demanded made little financial sense, but they were disguised as obligatory donations to get the most out of the services.
- You’ve been sold on the idea of using grass to embellish tales. Many Kenyans disclosed that they had attended meetings where well-dressed speakers described how they went from unemployment or low-paying jobs to making millions in a matter of weeks. These stories are intended to inspire prospective hires to formally sign up, which requires payment of registration fees. Meetings are often conducted in posh hotels as part of an attempt to project a veneer of performance. Such schemes are also widely promoted on social media, with luxurious lifestyles posted as proof of their success. It’s crucial to be wary of such shows, which often contain invitations to enter the program.
- You’re asked to sell low-cost products. Pyramid schemes in Kenya often include selling goods and items that aren’t in high demand, such as advertising materials for the scheme. You’ll need to spend a lot of money to get the goods in bulk, and promised that you’ll get a lot of money back. These goods are also used to offer a veneer of credibility to victims of the schemes. However, in the vast majority of cases, they only proposed unsustainable business models.
- You are compelled to purchase goods that you do not need. To remain a member of a pyramid scheme, many of them allowed members to purchase a variety of products. These branded organizational products are portrayed as valuable resources for achieving the financial targets in accordance with the scheme. Failure to purchase them, on the other hand, has repercussions, including expulsion from the group.