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New figures show London residents lost the most to pyramid scheme scams last year, with over a whopping £1.2 million (£1,292,540.74) lost per 100,000 people. This is 13 times more than neighbour county Essex, which lost £92,941 per 100,000 residents.
Despite losing the most to pyramid scheme scams, London had the lowest report rate. Only 8.03 reports were filed per 100,000 people. This is almost four times fewer reports than the Welsh region of Gwent, which showed an average of 28.36 reports per 100,000 of the population.
Wales also saw the fewest overall reports, at just 2 reports per 100k of the population.
- What is a pyramid scheme?
- Areas that lost the most in 2022
- Areas that lost the least in 2022
- Avoiding pyramid scams
According to Investopedia, a pyramid scheme is a ‘fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments’. It is called a pyramid scheme due to the different levels within the company, with the money trickling down the pyramid, benefiting those at the ‘top’ more than those at the ‘bottom’
For example, early investors in the company will get paid big returns, which leads to them recommending the scheme to others. Returns are paid by new money flowing in from new recruits, who may struggle to recruit others and make money.
Pyramid schemes may or may not involve the sale of products. In all pyramid schemes, however, the sale of a product is far less important than recruiting new investors.
- Does it seem too good to be true? It probably is! If someone is offering you huge amounts of money every month, or says you could earn thousands alongside your day job, it may be worth reconsidering getting involved.
- If there are huge upfront costs, it may be a scam. Remember, you shouldn’t have to pay to earn money! Many pyramid schemes will ask you to pay for your products to then sell them at a higher cost. On average, only 10% of people profit from these schemes.
- The products sold are overpriced and low quality. If this is the case, it could be a front for a scam to make the business seem more legitimate. The products will also be harder to sell, meaning you may lost out on money.
- If you think you have been scammed, contact Action Fraud or your local police authority.
Have you been the victim of a pyramid scheme scam? We want to hear from you! Leave a comment below or email firstname.lastname@example.org.
The post Stats: London lost £1.2 million to pyramid scheme scams in 2022 appeared first on MoneyMagpie.