Financial Scams by Another Name

You all remember the Financial Flower or Sou Sou a few years ago?

Well, it's back with a new name.

The Sou Sou is a community money concept popular in Eastern cultures, some African nations, and the Caribbean. You and your family pool your money to help one person or family unit finance a project or business. Think of it as family crowdsourcing. Let’s say there are 10 people in the Sou Sou or circle. Everyone agrees to put in a certain amount of money at a particular time and the first person or family at the top of the "flower" and ready to execute gets all the money. The first family gets the business started and sometimes, even employs members of the Sou Sou. At the agreed-upon time, the same 10 people pool their money together, including the first family that received startup funds. The next family or person in line gets the pot of money to start their business or project. This continues until everyone in the circle/flower gets their payout. Sounds like a good idea right? Sure, it works when you can trust everyone in the circle and everyone pays up.

Well, you know, when Westerners get a hold of something, greed jumps in and it goes left. This family crowdsourcing concept was perverted and was turned into a pyramid scheme.

Pyramid schemes are illegal. The New York State Attorney General's website defines a pyramid scheme as “. . . a fraudulent system of making money based on recruiting an ever-increasing number of "investors."  The initial promoters recruit investors, who in turn recruit more investors, and so on. The scheme is called a "pyramid" because, at each level, the number of investors increases. The small group of initial promotors at the top require a large base of later investors to support the scheme by providing profits to the earlier investors.”

A pyramid scheme has NO PRODUCT to buy or sell. Remember Bernie Madoff? He “sold” unsuspecting “investors” an opportunity to get a return on their investment. He didn’t produce a certificate of purchase of shares; just falsely created financial statements.

Well, it's baaaaaaaaaack but with a different name.

Someone sent me a friend request on FB and I accepted because we had one mutual friend that I regard highly. Little did I know, I was getting ready to be recruited for a money-making opportunity (not to be confused with Multi-Level Marketing. We will get to that next). She invited me to join XXX Funds (I’m concealing the name but they all say the same thing).

Her message boasted:

No Monthly payments

No Withdrawal Fee

No Auto-ship

No Selling Products

No Get Rich Quick Scheme (ha)

No Experience needed

No technical analysis

Who wouldn’t want to jump on that? She also said, it's automated and the cycles or contracts are 6 days long oh, and don’t forget the 10% commission for referral and matrix bonus. A return after 6 days . . . That sounds fishy.

I decided for research purposes, I’d pretend to join.

She invited me to the XXX Funds Group Chat and OH BOY!

Actually, I’m still in the group chat; I thought I would have been deleted by now

Here were the Red Flags!

The website on which she directed me for information was extremely vague.

There was no product, just instructions on how to give your money.

It was also unclear how to withdraw funds

There was no application process. No vetting. No background check.

The people in the group chat keep congratulating folks on their “hard work” or “success” when they make a deposit. WHAT HARD WORK?

I’ve only seen a handful of screenshots showing withdrawals but oh boy, I’ve seen numerous screenshots of deposits. I feel bad for the folks that are getting taken for a ride. BTW, I’ll be reporting them to the FTC, FBI, SEC, FINRA, all the acronyms. Actually, while writing this, I went ahead and filed the report with the FTC but I'm nosey, so I'm still in the group chat

Keyona, how is that different from Multi-Level Marketing (MLM) or Network Marketing?

MLM and Network Marketing must have a product for sale AND the basis of compensation must be the sale of the product. They can have a recruiting component however, compensation cannot be granted for just adding a new person to your team.

But Keyona, they keep telling me that to get promoted, I have to recruit. Yes, to get promoted or get a larger commission percentage, you probably have to build a team but that’s not the ONLY way to be compensated. That’s how sales teams work everywhere. The sales manager at your favorite Wireless Carrier store or High-End Retail store earns more commission than the Floor Associate but a product has to be sold for anyone to earn any money. In a pyramid scheme, the people on the bottom don’t get any money until they bring in a new person. Not the case for legitimate MLMs.

A few ways to check for a legitimate investment opportunity.

1.      What is the application process? There should be some vetting process and background check to confirm your legal status and existence.

2.      What licensing or regulating body does the Fund or Opportunity report to? Anytime the word investment is used, ask for the FINRA brokerage number or State Licensing Agency number. SEC and FINRA regulate all investing bodies in the United States. Even when I was researching an investment in another country, I had to prove that I was a citizen and register with the SEC.

3.      What is the product being sold? If there is no product, RUN!

4.      What is the compensation/commission structure?

5.      How will I receive compensation? DO NOT accept payments by CashApp, Zelle, or Venmo. Nah, that’s not legit.

6.      Must I recruit to receive compensation? If the answer is yes, RUN!

If you’re unsure, reach out to the Federal Trade Commission. Oh, they will tell you if it’s legitimate or not.  

Final word, Be careful. If it seems too good to be true, it probably is.

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Keyona Hargett is the owner and founder of FireWater Group, LLC a Small Business Consulting and Bookkeeping Firm. She is also a Personal Financial Coach and licensed Life Insurance Producer, pursuing the coveted Certificate of Financial Planning (CFP). She has over 20 years of experience as a Financial Analyst for Small Businesses, nonprofits, and the Department of Defense. When she is not crunching numbers, she teaches Zumba Fitness, STRONG Nation and is a powerhouse vocalist in the Washington, D.C. Metropolitan area.

For Financial Health Coaching, Contact Keyona at admin@firewatergroupllc.com or schedule an introductory meeting: https://calendly.com/firewatergroup/financial-health-introduction-meeting