3 Common Financial Scams on Social Media
Published By admin with Comments 1
If you’re unfamiliar with these schemes and how they operate, it’s easy to get sucked into poor personal finance decisions. After all, the people that run them know exactly what to say. To know what to look out for, here are the most common financial scams you’ll see on social media.
1. MLMs
Multilevel marketing (MLM) is a business model where you sign up to sell a company’s products directly to consumers and earn commissions on sales. You can also recruit other people to do the same thing. Anyone who signs up under you is your downline, and you get a commission from their sales, as well.
People involved with MLMs often use social media to find potential recruits. Their pitches typically involve claims of how you can start making money on social media, become your own boss, and take control of your financial future. Examples of popular MLM companies include:
- Amway
- Avon
- Herbalife
- Primerica
- Mary Kay
The problem is that for all the talk about how great these supposed business opportunities are, hardly anyone makes money. Seriously. The FTC researched it and concluded that “less than 1% of MLM participants profit.”
If you ever get an MLM pitch and want to be sure you’re not missing out, search online for the name of the company and the words “income disclosure.” What you’ll find is that the only ones who make anywhere near a full-time salary are the top 0.5% to 1%. Take Amway, for example. The average income was $766 in 2021, before expenses, like the $76 annual registration fee.
2. Fake gurus
Spend enough time on social media or YouTube, and you’re probably going to run into ads by fake gurus. The star of the video displays some obvious signs of wealth, like a flashy car or a luxury apartment. They go on a spiel about how they used to be completely broke, but now they’re super successful and want to teach you how to live your dream life. There are also a lot of talking points they all seem to parrot, such as:
Content retrieved from: https://www.fool.com/the-ascent/personal-finance/articles/3-common-financial-scams-on-social-media/.
Social media increasingly is the preferential platform that gurus and MLMs use to pitch their scams and schemes. Never before has it been this easy for such con artists to garner a following.