MISSISSIPPI (WDAM) - Attorney General Jim Hood is warning folks about a pyramid scheme spreading through social media, also known as the "Blessing Loom."
According to an AG press release, the scheme may be referred to as a Christmas wheel or pay-it-forward loom. It assures participants that they can earn up to $800 if they pay a fee and share with friends to do the same.
But Hood said it is all a scheme and warns consumers to avoid them. In fact, such scams are illegal in Mississippi. Violators can face up to six months in jail and a $500 fine.
"I encourage anyone involved in these types of illegal schemes to stop their involvement immediately and refrain from spreading word about these programs through social media," Hood said in a press release.
According to the press release, the "Blessing Loom" tells customers to pay $100, typically into a PayPal account, and then recruit new participants. No products or services are offered in exchange for the payment. So, the only way for participants to make money is by asking others to join.
He said the reason the illegal Ponzi schemes keep circulating online is because those who have paid money into the scheme are trying to recruit other to get their own money back.
Another pyramid scheme, "Secret Sister" gift often rely on the same illogical premises as the "Blessing Loom."
"These pyramid schemes always collapse, and I hate that some people in our state would risk losing their money, especially this close to Christmas," Hood said.
For more information about this or other consumer issues, visit the AG website.