Don’t fall for a fake savings club

From time to time, Senior Planet contacts expert sources at the Federal Trade Commission (FTC) and provides their information to our readers, such as this article below. Visit the FTC website for this article and others from the FTC archives.

Imitation is the greatest form of flattery. It is also the largest form of “scam”. That’s why scammers are imitating some kind of casual savings club known as a ‘am am ‘ or “milkTo trick people into participating in what amounts to an illegal pyramid scheme.

If you’ve never heard of the term ‘sou sou’, a quick internet search will tell you it’s a rotating savings club with historical roots in West Africa and the Caribbean. It is a savings scheme between a small group of trusted people ̵

1; usually family and friends – who regularly deposit a fixed amount in a community fund and are paid in turn. In a sou sou, you don’t earn interest, you never get more money than you paid, and there is no reward for recruiting people to join. This way of saving is based on the honorary system and is not without risk.

So it’s not surprising that scammers set up fake sou sou savings clubs and opportunities like ‘The Circle Game’, ‘Blessing Loom’ and ‘Money Board’. These types of illegal pyramid schemes are the exact opposite of a sou sou: they promise that you will make more money than you put in and that you depend on recruiting new people to keep money in the fund. Like all other pyramids, when they run out of new recruits to bring in the club, the money dries up and everyone waits for their payout with the bag.

When you see a post or get a direct message on Instagram, Facebook or other social media about any of these clubs, think twice and remember the warning signs. If the offer is from a friend or relative, tell them about this arrangement. And if you’ve been contacted to join a fake sou sou, tell us: ftc.gov/complaint. Your report can help us protect others from being scammed.

Karen Hobbs is Assistant Director, Consumer and Business Education Division, Federal Trade Commission

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