
The Gen Z Pyramid Scheme Sweeping Instagram - Firebrand
https://medium.com/@juliaonken/the-gen-z-pyramid-scheme-sweeping-instagram-e6d53e0e2b46
======
JamesLeonis
There are a lot of judgment posts in the comments here. Let me ask a few
questions of the HN crowd:

* When were these kids educated about pyramid schemes and other scams? When were they taught the patterns to look for?

* Who is responsible for teaching them? Most of you will say "Parents", but are they equipped to understand and teach?

The old cliche is _Those who don 't know history are doomed to repeat it_ but
who is responsible for teaching that history?

And it's not just this scam. It's all over Cryptotokens right now. It's in our
free-to-play games. It's MLM. It's the house-as-an-investment because "housing
will never go down". It's thinking you're "Smart Money" so long as you aren't
the bagholder. And for the first few entrants, these tactics really do work.

This pattern of economic exploitation is old. Instead lets educate as many
people we know about the warning signs. It's especially important to teach
kids as they have no prior experience to guide them.

Everybody is stupid until we are properly taught, or burned. Maybe somebody
will warn you against a "hot new thing" that's hypnotized your attention.

~~~
paulgb
Maybe games like this _are_ the education. Part of me wants to see
Instagram/venmo allow these to continue to happen because it's better for
these kids to lose $150 now than $10,000 later.

~~~
JamesLeonis
That would only work if everybody experienced the $150 expense. However the
winners never feel this pain. Additionally not everybody is exposed to the
Venmo scam. How many of us are hearing about it for the first time here? It's
a first for me to be sure.

Instead think about vaccinations: It's supposed to be distributed universally
and it does not harm the individual receiving the inoculation. This is what
you want. We can design tools for parents and teachers that have the same
educational impact without the side-effect of harm.

------
red_admiral
It seems like they're putting THIS IS A PYRAMID SCHEME on top and people are
still buying into it.

(Admittedly, pyramid schemes usually do work if you're the one starting them
and you don't get caught. It's also nice to see someone starting a pyramid
scheme that doesn't involve blockchains for a change :) )

One thing that makes me skeptical about this post is talking about "sweeping
instagram" in the title and "hype" in the post, but the best evidence for how
wide it's spread they can muster is

> The trend has been picking up speed over the last few weeks. My colleague,
> Danielle and I, could only find examples on Instagram stories but it’s
> entirely possible that it’s spreading on Snapchat too and we just don’t have
> the right friends.

Like other supposed worldwide youth crazes, until I see better numbers it
could be that something like 100 (ok, 128) people in the whole world have done
this and it's not half as big as it's claimed to be.

~~~
mrguyorama
The problem is that pyramid schemes need to be stopped ASAP to limit the
damage they do.

~~~
55555
There isnt much damage. No money is lost, it just moves. Admittedly into fewer
hands. The damage is mostly capped at $150 or so, I would imagine.

Normally in a ponzi there is a pretense of a business that you are funding and
so you can really empathize with those who were fooled, but no one is being
fooled here. They know the risks. This is a ponzi game, not a ponzi. It's
social gambling.

~~~
colanderman
> No money is lost, it just moves. Admittedly into fewer hands. The damage is
> mostly capped at $150 or so, I would imagine.

I mean, that describes literal robbery too.

~~~
SolarNet
Nah man, what if there are like 3 robbers. Then the money moved into more
hands (I guess if some of the robbers only had like one hand though...).
Pyramid schemes aren't a scam because _it 's fewer hands_.

------
matte_black
IMO this is a good opportunity for them to learn how a scam works before they
go out in the real world with real money and really get taken for a ride.

Everyone falls for a scam at some point in their life, better to learn early
with minimal loss of money.

~~~
ISL
$150 is real money.

~~~
matte_black
It represents what, two days of work at minimum wage? Sounds like a cheap
price to pay for falling for a scam. You could lose a lot more in this world.
_A lot_ more.

~~~
tomc1985
There are few things that appear more crass than this. Have you ever been
poor?

~~~
matte_black
When I was poor I couldn’t afford to go dumping 2 or 4 days worth of work into
weird schemes.

Once I did have more money though, I did get swindled, and for probably 10x as
much. But I learned.

Maybe the people taking part in these pyramids aren’t as poor as you think,
but probably still poor by some standard.

~~~
tomc1985
Sadly there is not very much overlap between that kind of logic and poverty.
Remember all the people that blew their FEMA debit cards on strippers and
shoes?

$150 was a huge amount of money when I was poor. It represented several-days
to a week's worth of earnings. You've got to be doing alright for yourself for
$150 to only be a day or two's worth of pay, after taxes and expenses.

------
psyc
When I was a kid, people were doing the exact same thing, only with the U.S.
mail, dollar bills, and much bigger pyramids. I'm kind of surprised it took
this long for me to hear of a social-media/online-payment accelerated version.

~~~
graedus
There was a popular one few years back called "money flipping". Mostly on
Instagram and Facebook. Not sure if it was a pyramid format but definitely a
get-rich-quick scam.

------
Covzire
It seems to me that pyramid schemes like this are orthogonal to many other
types of schemes, particularly in politics and entertainment, where the buy is
sometimes primarily time but the end result is the same, a waste of resources
which was supposed to result in happiness or achievement, that only benefited
the charismatic SOB's at the top.

------
aaron-lebo
It's interesting how prone the major social networks seem to be to outright
scams. You can find plenty of cult leaders and fake cancer treatments on
YouTube, Holocaust denial material on Reddit, etc.

Of course those companies have every right to keep that material up, but it's
strange how those scams are tolerated when other stuff is taken down. The pure
scale of it all probably makes those scams more effective than they used to be
as well. You don't gotta sell your miracle water from town to town anymore,
you just make a YouTube video and send it out to a million people.
Cryptocurrency scams really take advantage of this.

Not sure why those companies don't care about users getting taken advantage
of, but they don't. Sometimes it feels like our economy is based on scams all
the way down.

~~~
ghostbrainalpha
But maybe there is a positive side to this...

50 years ago this scam would have been targeted at middle aged people, in the
prime of their scam detecting abilities.

These gen-z kids are getting hit with this stuff earlier, but will possibly
spend more of their lives as savy, post scammed individuals. So the exposure
leads to greater societal intelligence.

And because the scam is aimed at the young, the amount of money they are
losing is generally in the hundreds, not thousands of dollars, and has less of
an effect on their overall quality of life or their retirements.

~~~
mrguyorama
Not everyone who gets scammed learns. Many people become "rubes" again and
again.

------
tbihl
Actually, the funniest thing is that they have to strike a balance of people
who understand how the system works enough to pay in and recruit others to do
the same, but not enough to stay out. I found a craigslist ad that shows that
difficulty:
[https://micronesia.craigslist.org/fns/d/turn-150-into-1200-o...](https://micronesia.craigslist.org/fns/d/turn-150-into-1200-one-
time/6455553260.html)

(Disclaimer: this is not my ad, and the only thing worse than the
unconscionable stupidity of participating is the support you're giving to the
the stupid person above you to keep being stupid.)

------
wink
Trying to understand the "rich" part in "get rich quick" in this.

So let's assume I'm the one who started this thing - if I just start it I only
get 1200$ out of it. How often do I have to "rejoin" the tree to cash in more?
I'd have to pay 150$, so I can't randomly do that - or do I see that as an
investment? Only thing that comes to my mind is keeping a whole "lineage" to
myself with my fake accounts, so I only ever pay myself and cash in from the
sidelines?

Maybe I'm just not smart enough to pull a pyramid scheme...

------
koolba
Anyone stupid enough to do this is getting off very cheap. If anything this
will save them money in the long term as hopefully they'll only be swindled
for the original $150.

~~~
pavel_lishin
$150 is probably not that cheap for a teenager; and I bet that a lot of them
will re-"invest" into multiple stacks once they succeed once.

~~~
tbihl
I think you're missing parent's bigger point. Nothing is big for almost any
teenagers, because at the end of the day they don't have to pay rent or buy
groceries or that type of thing. Plus, a good percentage of them are about to
be saddled with 100-1000X that amount in debt. $150 is water under the bridge.

~~~
pavel_lishin
It's cheap compared to losing your life savings, but consider that being
saddled with debt that's an investment(†) in college is different from losing
$150 that you could spend on lunch tomorrow - in addition to the fact that
they're likely not earning anywhere near as much as you and I are.

When I was in high school, losing $150 meant that I'm out of gas money for the
next two weeks, which means that I'm riding the school bus every day at 6am,
holding on to a paper bag with a sandwich I made the night before.

~~~
pasta_strainer
So...not a big deal?

~~~
pavel_lishin
Yes, my point was certainly that losing the ability to interact with your
friends and peers in high school, as well as shifting your sleep schedule for
half a month, is _no big deal_.

Can I have $150?

------
geephroh
I wish I had three hands so I could triple face-palm.

------
mcphage
Everything Old Is New Again

------
Orangeair
Reminds me of the transparent bitcoin ponzi scheme that was pretty popular for
awhile before being shut down.

------
tintor
Why would you buy into pyramid from somebody else over starting your own and
avoiding the risk?

------
pavel_lishin
Suckers keep being born.

------
tlarkworthy
How does the scam author profit? Seems like all the funds 4x150 = 1200 get
distributed back into the network.

~~~
Jtsummers
8x150. Presumably the originators were on multiple such pyramids. And if
they're smart then they won't pay out $150 to anyone, just start a new one. Or
maybe start themselves in the middle of one.

~~~
colanderman
Or make 7 fake accounts, friend 8 gullible people with 4 of them, and rake in
$9600.

------
lawlessone
Meanwhile Gen Y are playing with cryptocoins. Gen X are sitting on stock. And
everyone older is collecting a pension.

~~~
pembrook
Owning stock in public corporations that generate immense value, profit,
employment, etc. and hold vast income producing assets on which their
valuation is based is not even slightly similar to a Ponzi, pyramid, or crypto
scheme.

~~~
paulgb
I 100% agree that they are different, but I think it's also worth pointing out
that value-producing assets can still bubble away from a realistic valuation.

