Ponzi scheme is a form of fraud which believes the success of a non-existent enterprise and fostered by the payment of quick returns to the first investors from money invested by later investors. The basis of such a scheme is treachery and lies. Since they have little or no legitimate earnings they require a consistent flow of money from new investors to continue the scheme. They tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out. After going through this article, esteemed readers are expected to resolve against never participating in such schemes again in future.

These schemes are nothing new. They had been there and will continue to be so in the future as it appeals to the baser instincts of human beings. Some well-meaning readers, even after reading this article may go ahead and still put their investment anyhow in such schemes defying all logic. The Get Rich Quick mantra is too good to be true. An opportunity too good to miss which may not come your way again. It is written in the Bible, “…seeing they see not; and hearing they hear not, neither do they understand.”(Matt. 5:13). Of course, there is fun and enjoyment in sin for a season. Some early birds benefited from such schemes and enjoy the party till it lasts. It’s a dreamland. They will wake up with a jolt when it ends abruptly. If it is too good to be true, then it is! The early investors need to be happy to bring in more investors to give a good impression and prove that your investment is genuine by backing it with real testimony. When the net is wide enough, then its time the scheme winds up. They go back where they come from. Normally, nobody knows where it is. It’s the last batch of people who are the ones set to lose their money.

The intention of this article is not to keep readers from getting rich. But money has a way of defying logic.

On the next day after demonetization, everybody anticipated a stock market crash. But contrary to everybody’s expectation the stock prices went north. That is why rich people continue to be rich. They know how money works. They have financial education and have respect for money. For instance, ordinary people will have no qualms of purchasing petrol on the roadside during these lockdown days at the premium price of Rs.120/- per litre in a mineral water bottle. But a rich man will not buy it except under extraordinary circumstances. For him, it is too costly, he will say, I can’t afford it. Besides, it has chances of being adulterated and even spoils the vehicle. There is a need for the financial education of the masses.

WHAT ARE THE SCHEMES?

In the past, there were schemes like NSEM, Hello India Express, TVI, ICTIL, Visaref, Rose Valley and many other more which went bust. The investors in Salai Holdings are hoping against hope of getting back their money. More recently there are schemes like Sarva Public Ltd., Osmose Technology Pvt. Ltd., Add Income Group (AIG), More Choice, SoJob.io, etc.

HOW DO THEY WORK?

Let us have a closer look at the modus operandi of a couple of schemes to understand how they work.

In Sarva Public Ltd. the minimum investment is Rs.5000/-. Once you deposit it, according to the Plan A of the company, they will in turn deposit into your account Rs.90/- per day for 99 days, which means you will get back a total of Rs.8910/-. The Plan B has the same minimum investment of Rs.5000/- for 200 days tenure and the depositors account will see Rs.68/- deposited per day and in the end will receive Rs.13,600/-. Maximum deposit amount is Rs.5,00,000/- in both cases. Everything looks fine on the surface. These plans can be seen uploaded on the Facebook page Sarva itech as on 4 August 2020. But as on 28 August 2020, the money is not coming into the depositors account anymore. They claim that all problems will be resolved by 25 September 2020. This is very unlikely.

Osmose Technology Pvt. Ltd. is another scheme which appeals to internet users. They came out with an app called PikFlick, a reward for using it is Rs.20/- per day with a downline option. There are attractive rewards like Dream House, World tour, Mercedes Car, etc. Let’s look at how one can achieve Mercedes Car, which is after referral of 1,00,000 people within 4 months time. The sheer number of downline you need to generate and the limited timeline makes it almost an impossibility and in favour of the operators.

Add Income Group (AIG) is another scheme which is an android based app and can be downloaded from the play store and was released on 21 October 2019. So far, it has a download of 50,000. You can join the group with a deposit of Rs.599/- and you can earn income by watching the advertisement which is Rs.15 per day. There is a referral system where your downline can watch the advertisement and you get Rs.4.25/- per day. So, you have to call up your downline to watch the advertisement daily. You are allowed to withdraw only after it accumulates to Rs.5000/-. But even then you will get much less because around 20 per cent will go into various taxes.

If you don’t know what to do with your money, the Ponzi scheme operators or the scammers are stretching out their hands to hand over your money to them. They will keep it safe for you. Chances are that you may never even see it again. It would be quite logical to think that in times of crisis like this, during the covid19 lockdown, since you are not able to work, it sounds quite reasonable to let your money work hard for you.

There are times you won a lottery in your mail or in the mobile phone which are sometimes in terms of million dollars. Since you never bought a lottery ticket, if you suddenly win a lottery prize, then it definitely is a fraud.

There are some schemes which are tailored mainly for the youths now as they are tech-savvy. Transfer of money is becoming convenient through an online platform like Paytm, Google Pay, etc. These social media-based schemes target mainly the youth in the northeast.

In order to avoid such schemes, there are some things which you can do. Make sure your adviser is legit, ask friends and relatives for recommendations, dig deep, be sceptical of pitches for exotic or obscure products and be vigilant.