There appears to be a revived pyramid scheme in Australia called the ‘loom’.
I’ve seen it pop up in Facebook feeds and Instagram feeds and it is unfortunately capturing the attention of some people who appear to be of the view they can ‘make’ money from the loom scheme or craze.
I feel like in a few months time I will be fielding new enquiries from people who have lost money on this loom scam and will be wanting me to fight for them to get it back.
Lets be sure you know where this is going early……. it’s an illegal SCAM!
The concept is the same as every other pyramid or Ponzi scheme:
Lets summarise this in the way that it normally works to destroy people, friendships and lives:
In my example above a total of 19,208 people gave $300 to enter the loom, a total cash pot of $5,762,400. Only 2,401 people managed to cash out, taking $2,400 each and every dollar of the cash pot. The remaining 16,807 paid $300 and will get nothing for it.
The mathematics behind the scam is that 87.5% of people who buy in, will lose their money. The simple fact is that there are not enough people to keep putting money in.
The point I hope you see is that the early and first adopters of the scheme get the payout, the latecomers are doomed to fail.
The ABC recently published an article on the scam and how it uses social media to spread and especially lure young people into it and is worth a read.
Simply put……. YES.
The best framework I can put around this ‘loom’ scheme is contractual. It is not a bet, it is not an investment and you do not get any product for your money.
So, a contract is void if an essential element of the transaction it contemplates is illegal. Given pyramid schemes like the ‘loom’ are illegal in Australia, no money no money given into one is a valid transaction and should be returned.
As such, whomever you may have given your money to (your friend!) is liable to give it back to you.
Of course, the normal commercial realities of making a claim against another person apply: Do they have the money to give you? Will it cost you more money to get it back than the amount owed? Is it worth your time and effort to chase the money?
We only deal with civil claims and therefore deal with civil claims day in day out. Take a look at the type of legal services we offer.
Feel free to call us or make an appointment to talk about your issues and find out why you might want to choose us to help you make a claim.
DISCLAIMER: The above article was written at a specific point in time in the past and is provided as general guidance only. It is not intended to be specific legal advice to any person’s particular circumstances who may be reading it. We do not recommend you use this article as a replacement for obtaining proper legal advice on your issue and encourage anyone reading the article to obtain legal advice to ensure the above information and guidance remains valid and suits your particular circumstance. In our experience, there is no ‘one size fits all’ to legal problems!