'Blessing Loom' Pyramid Schemes Are Resurfacing Amid Coronavirus Pandemic

The ponzi scheme has been especially prevalent in Utah.


Image via Getty/Jaap Arriens


An old scam that has frequently surfaced over the past few years is rearing its ugly ass once again to try and part you from your money on the off chance that you're very naive.

So, well,  let this serve as a warning. 

The scam, which is commonly known as "Blessing Loom," involves people recruiting new members to pay an entry fee to join some sort of group. The founding member (or person who replaces them) then pockets those fees and bails, while the new members then have to find fresh recruits to continue paying entry fees. Eventually the scheme falls apart when one runs out of people who don't ask questions, such as, "Why do I have to pay an entry fee?" or "What is this group even for?"

At that point, if someone a late-joiner, their money is lost. You can contrast that with being an early-joiner who might get a payout via illegal means. And though the law probably has bigger fish to fry at the moment than prosecuting fairly low-level online scammers, you would still have to live with the fact that you're a douche.

For those who are more visual learners, here's more of a breakdown. 

"[A] form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors."

Also, the scam would appear to be of the Ponzi-variety (see: very illegal), as Google defines those schemes like so:

Eventually the scam goes away, only to resurface at some later date. It's probably always cycling through somewhere. For proof of that, here's a BBC report from last month. Here's a report from Vice in September. Here's a Medium post from April 2018, and here's a story from Alabama.com from November 2016. There's literally thousands more, but you get it.

Right now it seems to be making a repeat trip through Utah. A woman who spoke to local media outlet 2News, revealed that she paid $100 to get into one of these groups because it had the promise of an $800 payout if she could get others to join. She then began messaging her friends on social media to get them to buy in as well. Eventually, she said she just walked away and accepted the (relatively tiny) financial loss. While that woman used Venmo, others have been similarly scammed using PayPal, social media, or even the old school way (in person). 

One could argue that losing $100 is better than collecting money from others in a way that authorities could prosecute if they decided to. Consider that a better reason not to involve yourself in these. 

On that note, a spokesperson for the Utah Division of Consumer Protection declined to comment to 2News about whether they were investigating reports of 'Blessing Looms.' 

Previously, the Utah Department of Commerce warned consumers about looms, and specifically cautioned youngsters who were getting swindled on social media at a disproportionately high rate. 

"Blessing Looms" in an era where the economy has been ravaged by a pandemic seem particularly insidious, since people are desperate to try and find ways to make money. 

The good thing is you know how it works now (or maybe even years ago). You probably weren't going to get fooled anyway, but feel free to spread the news to people in your life you think may need to hear this:

Also, stay vigilant for the next time. 

Latest in Life