It's funny how money change a situation. Lauryn Hill told no lies when she rapped that on "Lost Ones," and according to my Facebook timeline, folks are losing friends and patience over the latest money-taking craze, the 'Blessing Loom'.
Also called a "Snowflake Blessing," "Christmas Wheel," or "Infinity Loom," people invest $100 to join a Blessing Loom and get back $800 in as quick as 24 hours if they work their Loom right. Sounds easy enough, but according to experts, it's a classic scam.
How Does A Blessing Loom Work?
It's starts with a passive-aggressive invite, in this case a Facebook post, letting people know that the Blessing Loom really works and if you're serious about 'cashing out' just like them, direct message them for details.
To join their Loom, you must send a one-time payment of $100 via PayPal. Your name takes a space on the outside of the loom. To get to the center of the loom, where you'll collect your $800, you must recruit two other people to invest $100 who also recruit two more people.
If you and your loom can recruit people quickly enough, you potentially can collect your $800 in a few hours, at least that's how it claims to work. Unfortunately, many people buy in without ever getting a return on their investment.
No matter what name it goes by, according to Mississippi Attorney General Jim Hood, the Blessing Loom is nothing but a pyramid scheme.
“These so-called gifting circles that are all over social media right now are nothing more than illegal Ponzi schemes,” Attorney General Hood said in a statement.
“The only reason they keep circulating online is because...
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...the people who have paid money into a scheme are desperately recruiting others in hopes they can get their money back," Hood added.
"These pyramid schemes always collapse, and I hate that some people in our state would risk losing their money, especially this close to Christmas.”
Red Flags
If you're unfamiliar with pyramid schemes, Ponzi schemes and multi-level marketing (MLM), it can be easy to get caught up in a too-good-to-be-true offer, especially during the holidays when money is tight and people are more vulnerable.
In addition to ignoring offers that promise high profits, a press release from the State of Utah Department of Commerce also urges consumers to look for these signs common of Ponzi schemes and gifting pyramids:
- Promise a consumer that they will make money with very little effort or investment.
- Pitches include persuasive success stories of how many other people have made money from the same venture without providing concrete facts.
- Revenue is generated from bringing in new members or friends to buy into the program.
Sou-Sous & Cooperative Economics
Truth be told, many of the people going hard in favor of the Blessing Loom being legitimate are simply those that have bought into it already and want to get their $800 (or not lose their $100). However, there are many that don't see a scheme at all and instead, say social media has put a modern spin on the traditional West African sou-sou.
Sou-sous are an informal savings club, where a group pools their monies and contribute on a regular basis to a common fund. After a specified period of time, each member will receive a lump sum payment from the pot. You reap what you sow; get back what you put in.
For example, a sou-sou of 10 people putting in $100 a month would...
...allow each person to receive $1000 within a 10-month period. Typically, members deal in cash, so there are no banks or paperwork to deal with.
The practice is common among African and Caribbean immigrants, usually family and close friends.
In recent months, the message of practicing cooperative economics in the Black community has become a central conversation and some see sou-sous as a way of helping ourselves. Collective savings could be used toward a common goal, like buying property, blessing a Black-owned business or even starting a Black-owned business. But, should those savings still be put into a bank? Financial expert, Michael Hudson, believes so.
“I do not feel this is a sound financial way of saving,” Hudson told TheGrio. “An individual would do better to save on their own, but more importantly invest their money in vehicles that would help them reach their desired financial goal. Even if everybody is on the same page, the sou-sou program is still is a huge risk.”
Potentially, someone could stop making payments to the sou-sou once they received their payout, or stop contributing to group if they grow tired of waiting for their turn. Sou-sous also don't allow the funds to grow interest since they aren't in a bank.
Whether you're considering a Blessing Loom, sou-sou or another group money venture, just keep in mind that money matters have ruined many a relationship. Make sure you're making the right investment on all fronts.
