- There are warnings of an international online scam called the "Loom" scheme in Australia, which targets young people through social media
- The scheme was first reported in the UK and is now circulating on social media platforms, with users asked to invest $300 with the promise they will make eight times the amount once they recruit family and friends
A new online scam called “Loom” has reportedly hit Africa, targeting students and young people on the continent.
The scheme targets vulnerable young people through social media and can lead to participants "scamming" their family and friends.
Participants are asked to invest an amount of money with the promise they will make eight times the amount once they recruit family and friends.
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ABC news reports that the scheme was first reported in the UK and is now circulating on social media platforms in Australia.
Meanwhile, Queensland University of Technology fraud expert Dr. Cassandra Cross has likened “Loom” to a pyramid-selling scheme.
According to her, many people would be left duped and out of cash once they ran out of friends to recruit.
"There are a lot of similar characteristics of a pyramid scheme … but this is a circle one where people get pushed into the middle," Dr. Cross said.
"If you think about it in terms of disposable cash, the small amount that they are asking would be attractive to a younger demographic who has that money available," she added.
Below are some signs to look out for in the Loom pyramid scheme scam, according to the Australian Competition and Consumer Commission (ACCC):
You are offered a chance to join a group, scheme, program or team where you need to recruit new members to make money
The scheme involves offering goods or services of little or doubtful value that serve only to promote the scheme, such as information sheets
The promoter makes claims like "this is not a pyramid scheme" or "this is totally legal"
Do not let anyone pressure you into making decisions about money or investments — always get independent financial advice.
Be wary of schemes or products that promise a guaranteed income.
Consider whether the rewards you have been promised are dependent on product sales. If so, are the products of real value, sold at a reasonable price and something that there is actually consumer demand for?
Remember that family members and friends may try to involve you in a pyramid scheme without realising that it is one.
It is against the law not only to promote a pyramid scheme, but to participate in one.
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