Scams, Phishing and Ponzi Schemes

Time is money

A scam is a fraudulent way how wrongdoers lure victims into giving them money. A scam is one of many forms of stealing. There are two main types of scams – phishing and Ponzi schemes. 


Thieves may pose threats of violence to obtain money from their victims.

On the other hand, scammers use their charm and marketing talents. These include sending beautifully crafted emails and convincing SMSs pretending to be legitimate service providers to their victims. This scam is known as phishing.

For example, a scammer may send an email or SMS pretending to be a utility company or government agency, asking their victims to follow a website link and provide them with their payment card details to provide a fictitious refund. The victim will get redirected to a legitimate-looking website without suspecting anything and provide their payment details. 

Ponzi schemes

In a Ponzi scheme, scammers steal money by luring their victims through promises of unrealistic or too good to be through returns on an “investment” in a short period. 

What would you do if someone asked you for Euro 100 and gave Euro 1,000 in return? You’ll probably say yes. On the other hand, would you consider someone giving you Euro 100 and you’ll give them Euro 1,000 instead? You’ll say no. If the last situation sounds ridiculous, thinking about the opposite is ridiculous. Who’s going to give you something for nothing.

If something is too good to be true, then it is. Unfortunately, most people are susceptible to these easy returns. Why? Scammers sell people the dream of becoming instant millionaires without grit and hustle. 

Pyramid schemes

Some Ponzi schemes may entice people into falling into such ruses by promising commissions to their victims if they convince their family and friends to join.

The structure takes the form of a pyramid or, as it is better known, a pyramid scheme. The more people who enter, the higher the pyramid. Scammers at the highest point of the pyramid get the highest return, while newcomers are at the bottom of the pyramid. For newcomers to survive, they’ll need to recruit people. 

There will come the point where there won’t be enough new people joining, and the whole pyramid will collapse, leaving those at the bottom fuming with losses.

Rug pulls

A rug pull is when scammers ask people to invest in a fictitious investment opportunity. The swindler will persuade victims to invest by giving a return on investment to convince victims to invest more.

For example, one may be sceptical about investing Euro 1,000 and opt to invest Euro 100 instead. The scammer might give a 10% return to winning their prey’s trust. 

Once the victim sees that they’re getting paid, they’ll opt to invest higher amounts as they’ll feel that the investment is safe and reliable. There will come a time when the scammer will disappear into thin air, known as a rug pull.


Money left to dry
Source: Pixabay

Scams aren’t something that came into existence in the last few years. One of the earliest well-known scams took place in the 1920s by Charles Ponzi. The biggest scam run by Bernie Madoff was worth about $65 billion. He got caught in 2008.

The internet made scams more widespread and globalised, while blockchain technology anonymised perpetrators’ identities.

Banks tend to refute responsibility if you click on a phishing link. However, banks have established ways to authenticate users’ transactions, such as using a one-time code sent through an SMS or the bank’s mobile apps to mitigate risks.

Scammers moved to use pseudo-anonymous means, such as demanding payments in Bitcoin and other cryptocurrencies. Bitcoin is a means of payment designed against Government or foreign state coercion, domination and control. While Bitcoin and other cryptocurrencies provide technological opportunities, such payments make it difficult to recover sent funds.

If you’re a scam victim, there is little you or law enforcement agencies can do to recover stolen money except to file a police report in the hope that the criminals will someday get caught.

Your only solution is to educate yourself and remain vigilant at all times.


The information contained in this post is for general information and educational purposes only. We endeavour to keep the information up to date and correct. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability concerning the website or the information, products, services, or related graphics contained on the post for any purpose. This article is not financial advice. Do your research.

The article may make use of the referral links. There isn’t any additional cost for you to click on them.