The unlicensed Loom investment scheme is receiving high patronage in Ghana

An unlicensed investment scheme, Loom, which became popular in Ghana about a week ago is receiving patronage by many people in the country.

Loom

This is ongoing despite the Securities and Exchange Commission (SEC) caution against the scheme to the public.

Most people patronising the scheme are using social media platforms particularly WhatsApp and Twitter. 

Loom is a peer-to-peer scheme which involves people being invited to invest as little as GHC20 with the promise of a return eight times its value within a short period of time.

When one joins a Loom group, the new entrant is encouraged to get as many other new investors as possible in order to ensure that the scheme is sustained.

This is because the scheme is likely to fail if new investors do not contribute to paying old ones.

Usually, the investors convince potential entrants to understand that this is not a scam and people get their monies as fast as new people join.

An ordinary Loom pyramid is grouped into four colour-coded levels - purple, blue, orange and red. Whoever is the first to sign up for the group sits in the red level, which is the central level, and gets the payout when the group fills up.

Two people sit in the orange level, while four investors fill the blue level. The purple level takes new entrants with eight spots open.

Once the eight spots in the purple level are filled, the group splits into the top half and the bottom half as the investors in the outer levels move into new levels.

The new groups of seven investors each then have to recruit eight new investors to once again break the circles into another two groups.

But participants are now being arranged in a list according to whoever made payment first.

However, as with any such peer-to-peer investment scheme, new entrants are likely to lose their investments when investors start to dry up and groups take longer to fill up.

Our newsletter gives you access to a curated selection of the most important stories daily.

Welcome to the Pulse Community! We will now be sending you a daily newsletter on news, entertainment and more. Also join us across all of our other channels - we love to be connected!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Pulse Influencer Awards 2022 is Live!

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Referee behind chaos at AFCON was rushed to hospital after match

Referee behind chaos at AFCON was rushed to hospital after match

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer