Social media pyramid scheme targeting teens
LAS VEGAS (KTNV) - What is old is new again. This time it's a pyramid scheme making its rounds on social media and its target demo is teens.
"It's fast money," explained Milan Johnson.
Johnson went in on a pyramid scheme with a friend for $10 after seeing people talk about it online. The two college friends quickly learned it was a scam.
"It was not good, it was dumb," Ayanna Walker said.
Right now, there are several similar pyramid scheme on Instagram, Twitter, and Snapchat. People are using cash apps like Venmo and Paypal to exchange the money quickly.
According to posters, you can make anywhere from $400 to $1,200 depending on how much money you put into the scam.
"It seems interesting, it seems colorful, it seems like a way to make easy money," Mike Pequeen, financial advisor with HighTower Las Vegas.
Here's how the scheme works: you find fourteen people, and once they all put in money the top person takes the cash.
Pequeen said it might sound easy, but it's actually almost impossible to make your money back because once the top star takes the cash, the pyramid begins to duplicate until it finally collapses.
"The fact is that most people end up losing money in a Ponzi's game," Pequeen said.
But he said the scariest thing about pyramid schemes on social media is the fact they can spread like wildfire, attracting more people to the scam than drawing them away.
"You could quickly within hours create a Ponzi scheme that would have taken weeks years ago," Pequeen said.
According to Pequeen, pyramid scheme like this one are also illegal.