The Great Pyramid Makes A Comeback in 2019

Multi-level marketing, investment opportunities or network marketing aka pyramid schemes – come under many guises and usually require a down payment or ‘investment’ up front.

They range from household items, make-up or eco-friendly alternatives to ‘wellness’ products, even slimming aides and juices. Sometimes there is no product at all, just a vague promise of a healthy return on whatever you pay in!

Often convincing, and frequently spread through social media, these schemes snare you with inspirational posts the sellers have been coached into sharing, guised as a small business opportunity where you can “be your own boss” or “get rich”. Not only will they try and sell you their products but sell you the dream of joining their brand as your pathway to financial freedom. But in the words of Admiral Ackbar “It’s a trap!”.

The truth is – they are not and never will be an investment opportunity that will genuinely help you achieve your financial goals.

The schemes are set up so you will pay the person who has recruited you for your starter kit, or invest in good faith with empty promises of a fat payoff.

Currently the Commerce Commission is looking into a particularly nefarious scheme you might have seen online called “The Loom” in New Zealand. It’s been known to go by other names, including: “Loom Circle”, “Blessing Loom” and “Fractal Mandala”. 

This is much different from your average juice or make-up party, as there are actually no products involved. Like a Ponzi Scheme, which generates returns for older investors by acquiring new investors, it’s not a sustainable, regulated or even legal operation. There are people investing money with the promise of a healthy return, but unsurprisingly enough, receive nothing at all and with no one they can hold to account for their loss.

Typically, people will be suckered into these schemes because you might see a trusted source like a friend or family member posting about it. However, it pays to be vigilant.

In the case of “The Loom” scheme, you’re supposed to invest around $300. Then recruiters make the absurd promise you’d make 8 times that back assuming you, in turn, recruit enough people to join in the same scheme – each investing $300. 

Don’t be one of the Kiwi’s that falls for fake investment opportunities or pyramid schemes that will leave you out of pocket. Scams run through social media often target younger and more inexperienced victims. If you want to have a conversation with your loved ones or someone you know who may fall for or has been a victim to such a scam you can refer to our links below:

For safety tips and reading up on other forms of investment scams that could catch you out, we recommend you visit and read up on how identify and avoid investment scams.

You can also report scams or harmful digital content here.

AdviceFirst is a Financial Advice Provider (FSP23242).