Connecticut officials are warning residents that the COVID-19 crisis has led to a flood of pyramid schemes through social media targeting those who just received their economic stimulus payments.
In a joint press release Wednesday, Connecticut Attorney General William Tong and Consumer Protection Commissioner Michelle H. Seagull warned of an increase in reported scams over the past several weeks, many which seek up-front payments with the promise of a strong return on investment in just days to weeks.
The problem, both Tong and Seagull said, is that the only way to make money is to recruit others to take part in the scam.
“Pyramid schemes typically require a large up-front payment to join, with a requirement to recruit other paying participants. Participants who recruit a certain number of people are promised a large payout at the end,” Tong said. “In reality, the vast majority of people lose their money as participation in the scheme dwindles.”
In Connecticut, the most commonly reported scam in recent weeks is known as the “Blessing Loom.” But the scheme is just an old scam with a new name, Tong warns.
According to a recent warning shared by the FBI, the scheme fraudulently promises an $800 payout in a matter of days. Participants are asked to immediately wire $100 to start at the outside of the “loom,” with participants asked to send money online platforms like Venmo and PayPal. Under the concept, those who recruit more paying participants move closer to the center “payout.”
Tong said that unfortunately in many cases, participants don’t ever end up receiving any money at all. Instead, scammers have been using the method to filter funds into their own private accounts by capitalize on unprecedented unemployment and anxiety caused by COVID-19.
Seagull said that while this is the most common scam impacting state residents, it is one of many that have been pushed through social media in the last month and a half. She warned that if something seems like it may be a scam, residents should treat it like it is.
“Remember that if an offer sounds too good to be true, it probably is,” Seagull said. “We know that in times of hardship it can be tempting to give in to these offers, but we encourage families to take a step back, and recognize the signs of a scam. Unfortunately, in times like this scammers will try to take advantage of our fears. Don’t let them, and contact us if you see anything suspicious.”
To report a scam or fraud, call the Office of the Attorney General at 860-808-5318 or file a complaint online at dir.ct.gov/ag/complaint. You may also contact the Department of Consumer Protection by email at email@example.com, by phone at 860-713-6300, or online ct.gov/dcp/complaint.
— Jason Vallee