The Utah Department of Commerce announced Wednesday that it has received reports about an online gifting scam that is tricking people into paying into a PayPal account. The scheme, going by the name of Blessing Loom, asks unsuspecting social media users to contribute money and then recruit two friends with the promise of receiving a large profit.
Daniel O’Bannon, director of the department’s Division of Consumer Protection, said that people need to be smart consumers and practice a healthy skepticism when contributing money.
“One of the things that kind of catches our attention with something like this, which is, there’s a clear connection between risk and reward. You’re not just going to give money with little risk and get a whole bunch of money in return,” O’Bannon said. “These types of things try to suspend that rule and say, ‘hey, there’s no risk,’ or, ‘there’s little risk,’ and you’re just going to get this great reward for doing little or nothing. Big red flags go off when we see that type of thing.”
The scam is classified by the Federal Trade Commission as a pyramid scheme where money from new customers kicks up to older customers under the illusion of profits. O’Bannon, whose division employs ten investigators, said that even when reputable companies such as PayPal assist officials, it may not be enough to get back lost money.
“We have a number of investigators that go after a wide variety of schemes. When you have a reputable company that’s involved, they are often very good to help us with what information they can to find out what’s going on on the other side of a scheme or consumer transaction,” he said. “That being the case, sometimes that’s still not enough. If someone’s overseas or has used information that’s really hard, if not impossible, for us to track, it may not be enough for us to find what we would need to try and address the issue.”
O’Bannon added that fake charities can spring up overnight and disappear just as quickly after defrauding people out of their money.
