Falling Prey Yet Again

What promised of high returns with little risk is giving sleepless nights to thousands of people who had invested their hard-earned money on the so called earning app Zalando. Many victims, including those from Nagaland have taken to social media to vent out their frustrations after the application disappeared on October 4, about nine months after it was launched. However, this is not something new. The Saradha scam and Rose Valley Chit Fund scam that hit headlines in 2013 for duping millions of investors must be still fresh in the minds of the people. This happened despite much awareness being created about Ponzi and pyramid schemes, which have been there for more than a century. The government of India had said in the Parliament in April this year that eight cases involving 84 companies had been assigned to the serious fraud investigation office (SPIO) during the past three years and the Centre had conducted more than 62,000 programmes and campaigns on several mediums of communication, covering 604 districts of 30 states and UTs across the country, to sensitise the citizens about Ponzi schemes during the same period. But such efforts have failed to stop people from falling prey to fraudulent investment scams. The existence of actors who knowingly get into such scams at the cost of thousands of gullible people is making it even harder to stop it. This is because the older investors get returns as long as there is inflow of investment. However, the scheme falls apart and stops operating without any warning when cash inflow decreases, leaving thousands of manipulated investors in the lurch.

Making matters even more complicated and confusing, Ponzi schemes posing as marketing programmes are often widely promoted on various platforms, including big events, websites and social media. Lawmakers and celebrities have also been linked to such scams. However, regardless of the technology used and extensive promotion, fraudulent schemes that are not registered with the Securities and Exchange Commission can be identified from characteristics like guaranteed high returns with little risk while almost all investments involve some degree of risk; consistent good returns irrespective of the market condition; lack of clarity in investment and official paperwork, etc. Identifying these common traits will help people avoid such scams. It is unfortunate that people of Nagaland continue to fall prey to pyramid schemes that come at regular intervals. The disappearance of Zalando came just months after Nagaland cyber crime police warned people against fraudsters going by the name HPZ Token, who duped crores of rupees from thousands of people across the country. This indicates that no amount of publicity and action by the law enforcing agencies can stop this menace if the people refuse to shed their gullible nature. The fact that we have been allowing several fraudulent scams to flourish year after year tells that Zalando won’t be the last.