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The Gen Z Pyramid Scheme Sweeping Instagram
- mcphage 9y agoEverything Old Is New Again
- pavel_lishin 9y agoSuckers keep being born.
- geephroh 9y agoI wish I had three hands so I could triple face-palm.
- aaron-lebo 9y agoIt's interesting how prone the major social networks seem to be to outright scams. You can find plenty of cult leaders and fake cancer treatments on YouTube, Holocaust denial material on Reddit, etc. Of course those companies have every right to keep that material up, but it's strange how those scams are tolerated when other stuff is taken down. The pure scale of it all probably makes those scams more effective than they used to be as well. You don't gotta sell your miracle water from town to town anymore, you just make a YouTube video and send it out to a million people. Cryptocurrency scams really take advantage of this. Not sure why those companies don't care about users getting taken advantage of, but they don't. Sometimes it feels like our economy is based on scams all the way down.
- ghostbrainalpha 9y agoBut maybe there is a positive side to this... 50 years ago this scam would have been targeted at middle aged people, in the prime of their scam detecting abilities. These gen-z kids are getting hit with this stuff earlier, but will possibly spend more of their lives as savy, post scammed individuals. So the exposure leads to greater societal intelligence. And because the scam is aimed at the young, the amount of money they are losing is generally in the hundreds, not thousands of dollars, and has less of an effect on their overall quality of life or their retirements.
- mrguyorama 9y agoNot everyone who gets scammed learns. Many people become "rubes" again and again.
- psyc 9y agoWhen I was a kid, people were doing the exact same thing, only with the U.S. mail, dollar bills, and much bigger pyramids. I'm kind of surprised it took this long for me to hear of a social-media/online-payment accelerated version.
- graedus 9y agoThere was a popular one few years back called "money flipping". Mostly on Instagram and Facebook. Not sure if it was a pyramid format but definitely a get-rich-quick scam.
- koolba 9y agoAnyone stupid enough to do this is getting off very cheap. If anything this will save them money in the long term as hopefully they'll only be swindled for the original $150.
- pavel_lishin 9y ago$150 is probably not that cheap for a teenager; and I bet that a lot of them will re-"invest" into multiple stacks once they succeed once.
- tbihl 9y agoI think you're missing parent's bigger point. Nothing is big for almost any teenagers, because at the end of the day they don't have to pay rent or buy groceries or that type of thing. Plus, a good percentage of them are about to be saddled with 100-1000X that amount in debt. $150 is water under the bridge.
- pavel_lishin 9y agoIt's cheap compared to losing your life savings, but consider that being saddled with debt that's an investment(†) in college is different from losing $150 that you could spend on lunch tomorrow - in addition to the fact that they're likely not earning anywhere near as much as you and I are. When I was in high school, losing $150 meant that I'm out of gas money for the next two weeks, which means that I'm riding the school bus every day at 6am, holding on to a paper bag with a sandwich I made the night before.
- pasta_strainer 9y agoSo...not a big deal?
- pavel_lishin 9y agoYes, my point was certainly that losing the ability to interact with your friends and peers in high school, as well as shifting your sleep schedule for half a month, is no big deal. Can I have $150?
- tlarkworthy 9y agoHow does the scam author profit? Seems like all the funds 4x150 = 1200 get distributed back into the network.
- Jtsummers 9y ago8x150. Presumably the originators were on multiple such pyramids. And if they're smart then they won't pay out $150 to anyone, just start a new one. Or maybe start themselves in the middle of one.
- colanderman 9y agoOr make 7 fake accounts, friend 8 gullible people with 4 of them, and rake in $9600.
- kirillseva 9y ago> 4x150 = 1200 o\
- deleted 9y ago[deleted]
- Covzire 9y agoIt seems to me that pyramid schemes like this are orthogonal to many other types of schemes, particularly in politics and entertainment, where the buy is sometimes primarily time but the end result is the same, a waste of resources which was supposed to result in happiness or achievement, that only benefited the charismatic SOB's at the top.
- matte_black 9y agoIMO this is a good opportunity for them to learn how a scam works before they go out in the real world with real money and really get taken for a ride. Everyone falls for a scam at some point in their life, better to learn early with minimal loss of money.
- ISL 9y ago$150 is real money.
- matte_black 9y agoIt represents what, two days of work at minimum wage? Sounds like a cheap price to pay for falling for a scam. You could lose a lot more in this world. A lot more.
- crapitalism9 9y agoDo... do you live in the US? Because federal minimum wage is $7.25, and 16 hours at that rate is $116... before taxes. And don’t forget that if you’re working for minimum wage, $150 is a LOT of money. If you make minimum wage, you make $15,080 annually gross. $150 is 1% is your annual salary. Hardly paltry. God, Silicon Valley is hilariously out of touch.
- rm_-rf_slash 9y agoActually, factoring in payroll taxes, it’s closer to 4 8-hour shifts on minimum wage. A more expensive price to pay for falling for a scam, but a very cheap lesson in the long run.
- throwawaydjc8 9y agoFederal minimum wage: $7.25 $7.25 * 16 hours = $116 gross Annually: $15,080 Percentage of annual salary ($150): 1% $150 is not “a cheap price to pay” if you are below the poverty line.
- tomc1985 9y agoThere are few things that appear more crass than this. Have you ever been poor?
- red_admiral 9y agoIt seems like they're putting THIS IS A PYRAMID SCHEME on top and people are still buying into it. (Admittedly, pyramid schemes usually do work if you're the one starting them and you don't get caught. It's also nice to see someone starting a pyramid scheme that doesn't involve blockchains for a change :) ) One thing that makes me skeptical about this post is talking about "sweeping instagram" in the title and "hype" in the post, but the best evidence for how wide it's spread they can muster is > The trend has been picking up speed over the last few weeks. My colleague, Danielle and I, could only find examples on Instagram stories but it’s entirely possible that it’s spreading on Snapchat too and we just don’t have the right friends. Like other supposed worldwide youth crazes, until I see better numbers it could be that something like 100 (ok, 128) people in the whole world have done this and it's not half as big as it's claimed to be.
- mrguyorama 9y agoThe problem is that pyramid schemes need to be stopped ASAP to limit the damage they do.
- 55555 9y agoThere isnt much damage. No money is lost, it just moves. Admittedly into fewer hands. The damage is mostly capped at $150 or so, I would imagine. Normally in a ponzi there is a pretense of a business that you are funding and so you can really empathize with those who were fooled, but no one is being fooled here. They know the risks. This is a ponzi game, not a ponzi. It's social gambling.
- colanderman 9y ago> No money is lost, it just moves. Admittedly into fewer hands. The damage is mostly capped at $150 or so, I would imagine. I mean, that describes literal robbery too.
- crapitalism9 9y ago>> No money is lost, it just moves. Admittedly into fewer hands. > I mean, that describes literal robbery too. I mean, that describes capitalism pretty well too.
- lawlessone 9y agoMeanwhile Gen Y are playing with cryptocoins. Gen X are sitting on stock. And everyone older is collecting a pension.
- pembrook 9y agoOwning stock in public corporations that generate immense value, profit, employment, etc. and hold vast income producing assets on which their valuation is based is not even slightly similar to a Ponzi, pyramid, or crypto scheme.
- paulgb 9y agoI 100% agree that they are different, but I think it's also worth pointing out that value-producing assets can still bubble away from a realistic valuation.
- tintor 9y agoWhy would you buy into pyramid from somebody else over starting your own and avoiding the risk?
- Orangeair 9y agoReminds me of the transparent bitcoin ponzi scheme that was pretty popular for awhile before being shut down.
- JamesLeonis 9y agoThere are a lot of judgment posts in the comments here. Let me ask a few questions of the HN crowd: * When were these kids educated about pyramid schemes and other scams? When were they taught the patterns to look for? * Who is responsible for teaching them? Most of you will say "Parents", but are they equipped to understand and teach? The old cliche is Those who don't know history are doomed to repeat it but who is responsible for teaching that history? And it's not just this scam. It's all over Cryptotokens right now. It's in our free-to-play games. It's MLM. It's the house-as-an-investment because "housing will never go down". It's thinking you're "Smart Money" so long as you aren't the bagholder. And for the first few entrants, these tactics really do work. This pattern of economic exploitation is old. Instead lets educate as many people we know about the warning signs. It's especially important to teach kids as they have no prior experience to guide them. Everybody is stupid until we are properly taught, or burned. Maybe somebody will warn you against a "hot new thing" that's hypnotized your attention.
- paulgb 9y agoMaybe games like this are the education. Part of me wants to see Instagram/venmo allow these to continue to happen because it's better for these kids to lose $150 now than $10,000 later.
- JamesLeonis 9y agoThat would only work if everybody experienced the $150 expense. However the winners never feel this pain. Additionally not everybody is exposed to the Venmo scam. How many of us are hearing about it for the first time here? It's a first for me to be sure. Instead think about vaccinations: It's supposed to be distributed universally and it does not harm the individual receiving the inoculation. This is what you want. We can design tools for parents and teachers that have the same educational impact without the side-effect of harm.
- trhway 9y ago>* When were these kids educated about pyramid schemes and other scams? When were they taught the patterns to look for? >* Who is responsible for teaching them? Most of you will say "Parents", but are they equipped to understand and teach? learning by getting you own bruises seems to be the learning way of choice of human species. Beginning of 199x pyramids of all sorts and at all scales swept across former USSR - pretty much everybody was a "kid" back then when it came to anything market/capitalism related, and thus they had to pay for their "practice based economic education" out of their own pocket : https://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company) https://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company) "МММ was a Russian company that perpetrated one of the world's largest Ponzi schemes of all time, in the 1990s." I expect that some ICO will soon finally beat the MMM record :).
- tbihl 9y agoActually, the funniest thing is that they have to strike a balance of people who understand how the system works enough to pay in and recruit others to do the same, but not enough to stay out. I found a craigslist ad that shows that difficulty: https://micronesia.craigslist.org/fns/d/turn-150-into-1200-one-time/6455553260.html https://micronesia.craigslist.org/fns/d/turn-150-into-1200-o... (Disclaimer: this is not my ad, and the only thing worse than the unconscionable stupidity of participating is the support you're giving to the the stupid person above you to keep being stupid.)
- wink 9y agoTrying to understand the "rich" part in "get rich quick" in this. So let's assume I'm the one who started this thing - if I just start it I only get 1200$ out of it. How often do I have to "rejoin" the tree to cash in more? I'd have to pay 150$, so I can't randomly do that - or do I see that as an investment? Only thing that comes to my mind is keeping a whole "lineage" to myself with my fake accounts, so I only ever pay myself and cash in from the sidelines? Maybe I'm just not smart enough to pull a pyramid scheme...