Get Rich Quick Scams and Myths

Everyone in the world it seems wants to get rich quick. Some people try to accomplish this by starting their own business and some people try to accomplish is by scamming others out of their hard-earned cash. These scams affect people in numerous ways and they can actually ruin the lives of good, hard-working people who trusted the scammers with their livelihood. In 2008, there were 72,940 complaints made to government offices about scams and that’s believed to be only a fraction of how many people were actually affected. One of the biggest Ponzi schemes in history was also discovered when Bernie Madoff was exposed at the top of a $50 billion scam.

Pyramid Scheme

One of the most popular get rich quick schemes – one that many, many people fall for – is known as a pyramid scheme. This is how a pyramid scheme works. Somebody, Mr. X, makes a payment to someone above him. For Mr. X to start making money as well, he has to recruit others to also make one payment each.The deal is that Mr. X gets a small cut of the payments that the people he recruits makes. The chain of people ends up forming a pyramid. The money only travels up the pyramid and the people at the bottom not only never make any money, they are actually losing it because they are making payments.

Ponzi Schemes

Ponzi schemes are one of the most damaging kinds of scams. These scams can involve billions of dollars and they are often carried out right under the noses of authority. Just look at Bernie Madoff’s scheme that helped cripple the United States as a whole in 2009. Ponzi schemes involve the promise of high returns on investment. However, the payments are not made by the person who promised the investors. Instead, older investors are paid returns out of the money of new investors. There is often no real investment at all! The scammer just gets massive amounts of initial investment money and then pays out much smaller returns.

Advance Fee Fraud

Known also as 419 scams or Nigerian Money Transfer Fraud scams, these scams target people and companies. Most often, a letter or email is sent out where someone claims to be a Nigerian national who will give the victim a check for a large amount of money if it is cashed so that some of the money can be sent back to Nigeria. They often claim they cannot cash the check in their own country and they are willing for the person to keep most of the money, only sending some back. For instance, they send a $500 check and only want $100. The person will deposit the check in the bank and send the money but the check will bounce. The victim will then have to cover it because the money was never there in the first place. The scammer makes out with $100 of free money.

Illegal Matrix

Illegal matrix schemes, known better as simple Matrix schemes, are similar to pyramid schemes or Ponzi schemes in many ways. The model involves someone exchanging money for a product, which is a normal business model. However, they are also then added to a “waiting list” for a product that’s worth more than the money they paid to get into the scheme. Once they reach the product’s “level,” they get it. The catch is that the only way to move up is for new members to join so people often have to recruit new members that buy into the scheme before they themselves can move up a tier.

  • Illegal Matrix: Discusses illegal matrices.
  • MLMs: A look at MLMs, or multi-level scams, like matrix scams.

Cash Gifting Scams

Cash gifting scams are another take on pyramid scams disguised as ways to “share the wealth.” The first person who starts it is on level A. He recruits 4 people to level B. Then he recruits 4 people to level C. Level C people then “gift” the person on Level A, a sum of money. Level B people only get money if there’s a Level D. In the same manner, Level C people only get money if there’s a level E, and so on. The people on the last two levels often end up never making any money at all, just giving it to others.

What makes these schemes even more damaging is that there if often no way to recover the lost money. Most perpetrators are never caught because the victims never even see them in person and when they are caught, they would have already moved the money elsewhere. While it’s easy to point fingers at the scammers, victims are also at fault because they allow their greed to blind their judgment. After all, it takes two to tango.

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