Pyramid schemes: expert reveals how Welsh residents can avoid being scammed [data]

Amid recent reports that Elon Musk has asked a judge to throw out a $258 billion lawsuit accusing him of running a pyramid scheme, Scams.info sought to uncover the regions which have lost the most to pyramid scheme scams. 

Scams.info have outlined the areas which lost the most to these types of scams by utilising data from the National Fraud Insurance Bureau (NFIB), and provided expert tips on how to spot a pyramid scam.

Key findings:

• London residents lost the most money to pyramid scheme scams, losing £1,292,541 per 100,000 people in 2022 alone 
• Gwent, Wales had the most reports of pyramid scheme scams per 100,000 people last year (28.36), 89% more than Lancashire residents with just 2.99 per capita
• Dyfed-Powys, Wales had the fewest reported pyramid scheme scams, with just 2 reports per 100,000 people
• Expert in scams, Nicholas Crouch, offers his key advice on how to spot a pyramid scheme scam.

The areas losing the most to pyramid scheme scams in 2022:

Rank	Area (by Police Force)	Pyramid scheme scam reports per 100k	Losses per  100k people (£)
1.	London	8.03	1,292,541
2.	Bedfordshire	15.90	879,743
3.	Dorset	12.59	367,173
4.	Gwent	28.36	183,154
5.	Cheshire	8.11	156,305
6.	Lancashire	2.99	121,356
7.	Northumbria	12.23	110,373
8.	Hertfordshire	3.58	108,278
9.	Merseyside	3.30	105,401
10.	Essex	5.51	92,941

     Please find the full dataset used throughout this study, here.

London residents lost the most to pyramid scheme scams in 2022, losing almost £1.3 million (£1,292,540.73) per 100k residents. This is 13 times more than neighbouring county, Essex which lost £92,941 per 100k population (10th). Despite this, there were just 8.03 reports of pyramid scheme scams in London per 100,000 people last year, almost 4 times fewer reports per 100,000 people than the Welsh region of Gwent (28.36 per 100k residents). 

Bedfordshire places second having lost £879,743 per 100k residents in 2022. This is 87% more than neighbouring county, Hertfordshire, who lost £108,278 per 100k people in the past year. Overall, Bedfordshire had the second highest number of reports per capita  (15.90), over five times more than Lancashire in sixth place, which had the fewest number of pyramid scheme scam reports per 100,000 people (2.99). 

Dorset ranks third with £367,173 lostper 100,000 people in 2022. The coastal county lost 82% more in pyramid scheme scams than in neighbouring country Hampshire, who lost £62,495 per capita — ranking 16th. In total, there were 12.59 pyramid scheme scam reports per 100,000 people in Dorset – over 6 times the amount recorded in neighbouring area, Devon (1.98). 

---

Scams expert, Nicholas Crouch from Scams.info, provides guidance on spotting pyramid schemes:

Setting unrealistic expectations

“Possibly the biggest red flag for pyramid schemes is the huge promises made by ‘employees’ to entice people. These typically come in the form of flash cars provided by the scheme, holiday homes, the idea of being your own boss and the freedom to retire early thanks to the scheme. If it sounds too good to be true, it probably is.”

If you are expected to pay large sums before employment 

“Pyramid schemes are constantly promoting what ‘great value’ their service is. The reality is quite different, with new recruits expected to pay extortionate fees for onboarding, such as: mandatory training courses, equipment needed to do the job and company events — often before starting the job. The constant reiteration of money is a massive tell that the pyramid scheme is a scam.”

The products sold are overpriced and of poor quality 

“The products pyramid scheme scammers are trying to get you to sell are often vastly overpriced, of poor quality and new recruits are often discouraged from asking about the products they are expected to sell. Just by shopping around you’ll find that better quality products are already on the market and sold for more reasonable prices.” 

What to do if you think you have been scammed by a pyramid scheme 

“If you are concerned that you have been scammed by a pyramid scheme the first thing you should do is contact your bank immediately. Then contact either Action Fraud or your local police service to report the details of the scam.”

---

[Case study] Scams.info spoke to an unfortunate victim of a pyramid scheme scam, who wishes to remain anonymous: 

“The job was advertised as a standard business marketing role, which said we would expect to receive training in sales and marketing, travel around the UK, trained leadership roles and bonuses and rewards. The recruitment was pretty straightforward, I had a quick zoom call initially with a group of people and then a private conversation. The in-person interview involved travelling to the office and knocking on doors for hours before the job was offered on the spot (red flag!)

The day-to-day involved knocking on doors from about 10 am to 8 pm every day including Saturdays. The culture was don’t talk about things that aren’t positive, if you aren’t surrounding yourself with people better than you, you’re wasting your time. I was overworked, on cold streets until late at night when it was dark and couldn’t complain. I would have my manager ring me during the day if I wasn’t making sales, shouting at me, and asking why I wasn’t making any sales.

I was initially told I was going to have my travel paid for, but this never happened. I was also promised a base salary when I joined, which never materialised. I was underpaid from the sales that went through. I spent 3 months fighting to get what I was owed – around £2,000 by my own calculations although this was refuted by them.

I eventually had to stop working on the field one day when I was having intense chest pains whilst knocking on doors and went to the hospital where I was told I was stressed, had lost over a stone in weight and was exhausted. It was this that really made me realise what I was doing and the stress on my family who had been very worried about me. 

My biggest advice is to leave. There is no shame, no guilt, you just have to do what is right for you – and you shouldn’t be made to feel guilty about it – there are ALWAYS better jobs out there. I wanted to prove I could do it, work up and become successful, but after nearly 6 months, it didn’t happen and the reality sunk in. Look out for red flags, and just know that there are positive, great companies to work for out there that don’t take advantage of you.”

Credit to https://www.scams.info/ who carried out the research and supplied the above post.