“It’s not a scam” and “everyone wins” are probably some of the messages you’ve come across on various social media platforms recently. Even if you haven’t stumbled across these messages, or on the flipside if you’ve been tempted to give in, you’ll want to continue reading.
As it turns out, a classic scam has resurfaced with a strong attempt to hoodwink individuals during a time when many cannot afford to lose a penny. “Blessing Loom,” “Wisdom Circle,” or “Gifting Loom” are just a few of the names for this tried and true pyramid scheme.
So, how does this whole thing work? Once a participant agrees to join the group, they are instructed via messaging services such as WhatsApp, Instagram, or Facebook Messenger to send in $100 using mobile payment platforms such as Venmo, Paypal or Zelle. The objective of each new member (along with everyone else involved) is to find fresh recruits to continue the flow of entry fees in hopes that they will later collect on those fees themselves. Sadly, the scheme eventually crumbles when there is nobody new to recruit.
Sure, this may seem somewhat trivial to those who can afford it, but what about individuals who paid an entry fee to join the group and have nobody to recruit? Many of the scammers are comparing this scheme to a “tanda” or “cundina” to attract individuals, but it is nothing like it – so don’t be fooled!
A “tanda” also known as a “cundina” is extremely common in Latin American countries, particularly in Mexico. Much different from a “Blessing Loom,” Tandas are held within a group of people who know each other (not random people who you have never met). Sure the risk of not getting your money back is there, but considering that Tandas are done amongst people you know, the risk is minimal when compared to its American counterpart.
There are no set rules as to how to manage a Tanda, but normally the group will gather in person to set an agreement on when and how much will be collected (weekly, biweekly or monthly) and who will participate. Then, participants draw a number to determine the order in which the pot will be given out.
For example, let’s say I form a tanda with Barry, Mary, Larry, and Carrie – a total of 5 individuals. Each participant gives $100 every two weeks to the group’s organizer – in this case, me. I’ve now collected $400 thanks to my awesome group. In two weeks, participants each pay $100 to the next collector and so on and so forth until everyone collects the same $400 that they’ve lent over the course of a few weeks.
Despite their differences, both run the risk of losing money. Oh and just because you “cashed out,” that doesn’t necessarily mean you weren’t involved in a scam. Be smart with your money, especially under these circumstances. Now is not the time to try and make easy money and potentially mess with someone who may need it more than you do.
What are your money saving tips? Let us know in the comments below.