In the press earlier this week, once longstanding reporting restrictions had been lifted, was the news that nine women were found guilty of a fairly substantial pyramid scheme.
The ‘Give and Take’ scheme (also known as ‘Key to a Fortune’) fleeced its victims out of around £19m at a cost of around £3,000 per sucker. Sorry, I mean ‘victim’.
No, I’m not sorry. I do mean ‘sucker’.
Honestly, what were these people thinking?! Look at how this scam was run.
It started in the Bristol and Bath area before spreading across the West Country and South Wales.
Victims were told they would receive a payout of £24,000 once they reached the top of a pyramid chart, in return for investing £3,000.
THEY ACTUALLY USED THE WORD PYRAMID!!
It was based around a 15 space pyramid, which each space filled by a sucker paying £3,000 to the person above them, and also needing to drag two friends into the sorry mess.
Once suckers reached the top of the pyramid chart, they became the ‘bride’ and received a payout at a champagne filled party, after deductions for the organisers and a small donation to charity, of course.
Organisers of the scam promised no risks (red flag) and victims had to agree not to write about the scam (another red flag) which helped to maintain its secrecy.
It goes without saying that I feel terribly sorry for anyone who genuinely failed to understand this was a pyramid scheme.
It’s particularly difficult to criticise the victims of the Give and Take scam because, I understand from press reports, many were vulnerable women, no doubt pinning their hopes (and life savings) on the possibility of getting rich in a difficult economic climate.
I get that. I really do.
But it’s about time that we stop treating all of the victims of such scams with such sensitivity.
There is undoubtedly a big element of greed and naivety at play here.
What else could inspire someone to part with £3,000, agree not to write about it, and believe it was a ‘no risk’ proposition? What else could convince someone that adding their money to a scheme based on a pyramid chart was ever a good idea?
As well as getting tough on the perpetrators of these scams when they are discovered, we need to focus more attention on the basic financial education which would help potential victims make smarter choices with their money.
To combat pyramid schemes, simply apply the teaching of the ‘grains of rice on a chessboard’ maths problem; place one grain of rice on the first square, double it on the next square and so on.
The number of grains of rice on the 64th and final chessboard square would be 2 to the 63th power, or approximately 18,446,744,070,000,000,000 grains of rice.
Now consider a pyramid scheme where each sucker has to find two more suckers to make the thing actually work (leaving aside the illegality and immorality of the scam). It doesn’t take long before you run out of suckers, does it?
Why are schools not teaching this? Why is the Money Advice Service not showing this in an advert, rather than blowing millions each year on vanity ‘awareness’ advertising?
Until we deal with this as a society, there will be more Give and Take scams and definitely more victims.
