Ponzi Schemes Flock to YouTube

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.

One example dug up by the Los Angeles Times featured quotes from the Bible, pictures of stacks of money, and "testimonial from a man who said he not only got rich from cash gifting, he also found true happiness and lost 35 pounds." The BBB claims that other schemers might even open a FedEx envelope with cash inside in order to "prove" the effectiveness of the program. We found a few other examples on YouTube, ranging from "proof" videos to the temptation of buying 2008 Lambourghinis to suggestions that tax season is the best time to start cash gifting.

The BBB said that it sent out its warning now because of the current economic climate. "With many families struggling to make ends meet in the current economy, Better Business Bureau warns that cash gifting is not a legitimate way to make a few extra dollars, and in fact, is nothing more than a pyramid scheme," the organization said. "Anyone tempted by slick cash gifting marketing appeals should run in the opposite direction, or they run the risk of being the next person ripped off by a pyramid scheme."

Found via Slashdot.