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Fraudsters continue to find gullible victims somehow, somewhere. This is why Ponzi scheme, which is named after Italian businessman Charles Ponzi, who tricked investors through his fraudulent investment scheme in the 1920s, is still alive and kicking. The desire to make quick money despite the obvious risk of losing everything at the blink of an eye seems to get the better of many even today. Technology and easy access to information have failed to stop the scam. Warnings from law enforcement agencies have fallen on deaf ears. So, it’s not completely wrong when they say the victims of such frauds deserve it. In fact, it is perplexing that many continue to fall victim to such scams to this day despite sensitisation campaigns launched by the government of India about Ponzi schemes over the years, besides witnessing and hearing distressing stories of people who experienced untold hardships after losing their hard-earned money to scammers.
Such investment scams lure victims to invest in fraudulent enterprises by giving quick returns to early investors, not from legitimate business profits but using the funds collected from new investors. It then phases out after a certain point, leaving thousands of investors in the lurch. Do you remember the Saradha scam and Rose Valley Chit Fund fraud that rocked the country in 2013 after lakhs of gullible investors were duped? How about the HPZ Token and Zalando that scammed thousands of people from across India, including Nagaland, a few years ago, forcing the state police to warn the citizens against fraudsters and to register a case against unknown accused persons? On Wednesday (October 23, 2024), the Nagaland Police once again issued an advisory, alerting the people about the existence of one company by the name RGA, which appears to be a Ponzi scheme. The police also advised the victims to immediately report the scam with details for remedial measures. This clearly tells that people have neither learned from unpleasant past scams nor are willing to help nip it in the bud by reporting suspicious “too good to be true” schemes to the concerned authorities.
While gullibility is to be blamed for allowing such frauds to flourish, it is sometimes difficult to identify fraudulent schemes because of extensive promotion on various platforms, including mega events and involving influential personalities. However, the risk of investing in companies that are not registered with the Securities and Exchange Commission can’t be undermined. Certain characteristics, like astronomical returns with little risk and a lack of clarity about the actual condition of the company, should be taken as a red flag for investment. It doesn’t take a rocket scientist to identify frauds, especially pyramid schemes. Awareness, cross verification and vigilance can ward off most scams, not just Ponzi schemes.