studying time: 2 minutes

New figures present that Londoners misplaced essentially the most to pyramid scheme scams final 12 months, with over a whopping £1.2million (£1,292,540.74) misplaced per 100,000 residents. That is 13 occasions greater than neighboring County Essex, which misplaced £92,941 per 100,000 individuals.

Though London misplaced essentially the most to pyramid fraud, it had the bottom reporting price. Solely 8.03 reviews had been submitted per 100,000 individuals. That is virtually 4 occasions fewer reviews than the Welsh area of Gwent, which averaged 28.36 reviews per 100,000 individuals.

Wales additionally had the fewest whole notifications, with simply 2 notifications per 100,000 inhabitants.

What’s a pyramid scheme?

In accordance with Investopedia, a pyramid scheme is a “fraudulent and unsustainable funding proposition based mostly on unrealistic guarantees of returns from imaginary investments.” It is referred to as a pyramid scheme due to the completely different ranges throughout the firm, the place cash trickles down the pyramid and people on the prime profit greater than these on the prime.

For instance, early traders within the firm obtain high returns, main them to advocate this system to others. Returns are paid for by new cash pouring in from new recruits who might have bother recruiting others and getting cash.

Ponzi schemes might or might not contain the sale of merchandise. With all Ponzi schemes, nevertheless, the sale of a product is much much less necessary than attracting new traders.

Areas that misplaced essentially the most in 2022

Areas that misplaced the least in 2022

Avoiding pyramid scams

• Does it appear too good to be true? It’s attainable! If somebody is providing you enormous quantities of cash each month or says you might make 1000’s when you work, it could be price reconsidering getting concerned.
• If there’s a high upfront value, it could be a rip-off. Keep in mind, you do not have to pay to generate profits! Many pyramid schemes will ask you to pay in your merchandise so as to then sell them at a higher value. On common, solely 10% of individuals profit from these programs.
• The merchandise offered are overpriced and of poor high quality. If that is so, this might be a entrance for a rip-off to make the deal seem extra legit. The merchandise may also be more durable to sell, which implies you might lose cash.
• When you assume you will have been scammed contact Motion Fraud or your native police division.

Have you ever fallen sufferer to a pyramid scheme rip-off? We need to hear from you! Depart a remark under or e-mail isobel@moneymagpie.com.