There are several reports in the media regarding the new business in town Loom but have you made enough efforts to find out if Loom is a scam?
LOOM Is Not A Company; You’re Basically Scamming Your Own Friends & Family
I’m sure by now you may have heard of LOOM or maybe seen it on Facebook, Instagram, Snapchat or on Whatsapp.
You may be confused about the whole thing and may have a lot of questions. Well read on for answers.
Table of Contents
How Does Loom Work?The Loom System Explained!
Is Loom Really A Scam?Should You Join Loom?Is Loom Illegal?
Is Loom A New Thing?
Loom is not a business, it’s not a company, it’s a scheme created by whoever is involved. It’s basically a pyramid scheme and like any of such schemes the business model can only survive by recruiting new members to join.
How Does Loom Work?
There are different set of colors for the loom as pictured above. The system works by recruiting new members to fill the blue spaces. When everybody in the blue space pays, the loom is split with the persons in the pink starting two different set of looms with them at the top-level and the other members moving up to fill the available spaces.
The person who sits in the middle or the top-level (purple) of the loom gets paid and he’s moved out of the system. He can choose to reinvest and start the whole process again or bounce. So every time a new person is recruited, others are pushed closer to the centre of the circle where they’re promised a pay out.
However, if people are unable to find investors and move closer to the centre of the circle, the last people to invest lose their money.
The Loom System Explained!
So the one in the middle (Purple) starts the circle or loom. He tells two people to join his circle. They are placed in the Pink. The two people in the Pink tell 2 people each to join the circle. They end up in the green. Now the Green people have to tell 2 people each they have to pay GHC200 to earn a spot in the circle on the blue space. Once the blue space is filled, the payout of GHC1600 is achieved for the top-level (Purple) and he can now take the money.
But the funny part of the system is, the Purple didn’t pay any money in the beginning. Neither did the persons in the Pink or in the Green. They were literally given free money without investing anything.
Is Loom Really A Scam?
The answer to this question is YES. This is because every last person to join the system is likely to lose his money in case the system collapse. Usually it’s ideal for the last person or the person at the top-level who gets paid to reinvest to keep the circle running but most often they don’t do that. As long as there’s no ‘motivation’ for people who get paid to stay, the scheme will collapse faster.
And mind you, the first person who started the loom will already sit on the top-level and they basically didn’t invest anything. They’re likely to bounce and start a new loom where they will sit at the top-level again.
Should You Join Loom?
I think I have made it quite clear that you’re basically scamming your own family and friends. If you get scammed, your money is within the group since you paid it to the one at the top-level.
Whoever you bring on board is likely to be scammed so I advice you really think twice before joining especially in a loom where large sums is promised for the top-level.
Is Loom Illegal?
Of course it’s illegal since it’s basically a scam. I don’t care how you see it, you’re scamming someone and that’s purely against the law. Pyramid schemes are illegal due to it being unsustainable and many people losing their monies. Ghana’s Securities and Exchange Commission (SEC) has also cautioned the public against Loom saying it’s unlicensed, and it will be impossible to license such a scheme since it’s not even a company.
Is Loom A New Thing?
NO! In fact blessing loom has existed for a long time. A quick search on Facebook for “Blessing Loom” will reveal hundreds of posts about the exchange.
There have been several reports of the system in the US, Nigeria, Australia, UK and other parts of the world with the media warning them against the scheme