It is an online investment scheme which was first discovered in the UK and it is now circulating across the globe with different names such as “loom circle” or “fractal mandala” or “Loom Money Nigeria.”
The scheme is targeted at a younger demographic of victims who are willing to part away with money on cyberspace.
The pyramid scheme has been appearing in newsfeeds online and circulating on social media.
How does it work?
According to the Economic and Organised Crime Office (EOCO), the Loom gets people to recruit other people to invest, much like a pyramid-selling scheme, grouped into four colour-coded levels - purple, blue, orange and red.
Whoever is the first to sign up for the group sits in the red level, which is the central level, and gets the payout when the group fills up.
Two people sit in the orange level, while four investors fill the blue level. The purple level takes new entrants with eight spots open.
Once the eight spots in the purple level are filled, the group splits into the top half and the bottom half as the investors in the outer levels move into new levels.
The new groups of seven investors each then have to recruit eight new investors to once again break the circles into another two groups.
But participants are now being arranged in a list according to whoever made payment first.
However, as with any such peer-to-peer investment scheme, new entrants are likely to lose their investments when investors start to dry up and groups take longer to fill up.
There is no actual product coming from the scheme and is only beneficial for people who get in early because everyone else pays up the chain.