The Blessing Loom Scam or Scheme is a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
It involves people recruiting new members to pay an entry fee to join some sort of group. The founding member (or person who replaces them) then pockets those fees and bails, while the new members then must find fresh recruits to continue paying entry fees. Eventually the scheme falls apart when one runs out of people who don't ask questions, such as, "Why do I have to pay an entry fee?" or "What is this group even for?"
At that point, if someone is a late joiner, their money is lost. You can contrast that with being an early joiner who might get a payout via illegal means.
As a result of charges brought by the FTC and the State of Arkansas, operators of this scheme have been banned from Multi-Level Marketing because of Pyramid Scheme charges.
It involves people recruiting new members to pay an entry fee to join some sort of group. The founding member (or person who replaces them) then pockets those fees and bails, while the new members then must find fresh recruits to continue paying entry fees. Eventually the scheme falls apart when one runs out of people who don't ask questions, such as, "Why do I have to pay an entry fee?" or "What is this group even for?"
At that point, if someone is a late joiner, their money is lost. You can contrast that with being an early joiner who might get a payout via illegal means.
As a result of charges brought by the FTC and the State of Arkansas, operators of this scheme have been banned from Multi-Level Marketing because of Pyramid Scheme charges.