BBB: YouTube acting as a vector for Ponzi schemes
Last updated April 14, 2009 12:31 PM CT
The Better Business Bureau has issued a warning to potential Ponzi scheme victims: just because there are thousands of videos on YouTube of people claiming to have gotten rich doesn't mean it's not a scam. The scam has flourished thanks to the Internet, but people should be just as wary of having to "invest" and recruit others.
Just as Nigerian 419 scams have adapted to the Internet age, so have Ponzi schemes. Also known as pyramid schemes, these types of scams have flourished online—particularly on YouTube, where the Better Business Bureau says there are almost 23,000 (and growing) Ponzi scheme videos. Because of the apparent growth in this type of scam, the BBB last week put out a warning telling consumers to avoid the temptation, and to learn how to recognize the warning signs.
Like Nigerian scams, Ponzi schemes are older than time. Those behind the schemes are usually very vague and construct numerous euphemisms for what's going on, referring to the system as a "cash gifting club" or "cash leveraging," or even describing them as fundraisers or self-empowerment programs. The end result, however, is that the victims end up "investing" money in order to earn the privilege to recruit others, who they then try to convince to "invest" money to recruit others, and so on.
The BBB says that the 22,974 Ponzi scheme videos on YouTube have manage to gain an "astounding" 59 million views. While they don't always recruit people to join directly from the video, those perpetuating the schemes often send viewers to another website to learn more about this amazing moneymaking opportunity they've discovered. Usually the entry fees range from $150 to $5,000.