A ponzi Scheme is a fraudulent investment scam that promises high returns with little or no risk. Instead of generating profit from legitimate business activities, the scheme pays returns to earlier investors using the capital of new investors. It collapses when the flow of new investments slows down, leaving many investors with significant losses.
HOW TO SPOT PONZI SHEMES (TIPS)
- 1. UNREALISTIC RETURNS: Promises of high, guaranteed and risk-free profits.
- 2. VAGUE BUSINESS MODEL: Lack of clarity on how money is generated.
- 3. PRESSURE TO RECRUIT: Encouragement to bring in new investors to make money.
- 4. LACK OF REGISTRATION: Not registered with financial regulatory bodies like; SEC, CBN.
- 5. NO PHYSICAL OFFICE OR TRACEABLE MANAGEMENT: Lack of transparency about the operators.
- 6. Delayed or Selective Payments: Payouts may become inconsistent or only to new investors.
HOW THE GOVERNMENT CAN REDUCE VICTIMIZATION
- 1. PUBLIC AWARENESS CAMPAIGN: Nationwide financial literacy campaigns through TV, radio, social media, and community programs. Target schools, universities and grassroots communities with tailored education.
- 2. STRONGER REGULATION AND MONITORING: Empower and fund regulatory bodies like: SEC, CBN and EFCC to proactively investigate suspicious schemes. Enforce registration and licensing for all investment platforms.
- 3. QUICK LEGAL ACTION: Fast-track prosecution of Ponzi scheme operators. Confisticate assets and create restitution funds for victims.
- 4. COLLABORATION WITH TECH COMPANIES: Monitor and block websites, apps and social media pages of known fraudulent schemes.
- 5. HOTLINE AND REPORTING CHANNELS: Encourage people to report suspicious investments anonymously.
