What is a Ponzi Scheme? Beware of this new scam in Pakistan

In Pakistan, a new kind of Ponzi scheme has been picking up pace. Under the scam, people get phone calls from strangers demanding a certain amount of money. These acallers claim that their ‘investment’ would double in a month.

The callers state that the money you give will be invested in companies, but on one condition. This is that you have to bring in two more investors that are willing to give money, and then those investors have to find two more investors each, to add to the equation and so on.

Due to unawareness of such frauds, many people fell for the scheme and started ‘recruiting’ people to make money. This has led to a plethora of people being subjected to scams and fraud, with no possibility of recovering the money that they’ve lost.

State Bank issues warning

The State Bank of Pakistan has issued a warning to the general public against fraudulent companies, non-corporate entities, and individuals.

The bank has urged the public to not fall for schemes of loans, investments, deposits, etc, which may result in the participant being scammed off his/her money.

There are multiple schemes of fraudulent nature, which are:

• Lottery scheme scam

Such scams attract people to earn wealth overnight. They make billions and also give ads of people ‘receiving prizes’ to make others fall for the fraud. In reality, no prize is given away, and the winners are actors there for advertisement.

• Deposit Scheme

This is another popular scheme that people tend to fall for. In this, high profit is promised to the ‘investor.’ They are assured of deposit safety but the culprits run away after a certain amount is accumulated.

• Employment Scam

Under his scam, job applicants are asked to pay an amount with their job application.

• Real estate scheme

Investors are asked to purchase properties in Pakistan and are promised high gains, but the properties/projects exist only on paper.

While there are multiple fraudulent schemes to trick people into handing over their money, the ones that people fall for most easily are Pyramid or Ponzi schemes.

Ponzi Scheme

These schemes require the new customers to bring in more members into the geometric progression. Then, the process becomes so saturated that only those at te top of the scheme make money.

Ponzi schemes are exposed after new investors reject investing money. As there is no ‘scheme’ to back up the profit claims with, the entire structure inevitably crashes.

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