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Social media has no shortage of people who want to separate you from your money.
Key points
- MLMs frequently recruit people on social media for supposed business opportunities, but only those at the very top earn money.
- Fake gurus use social media to find buyers for low-quality, heavily overpriced courses and mentoring sessions.
- Social networks also have their fair share of investment scams, including Ponzi and pump and dump schemes.
Social media makes it easy for people to connect, and that has its pros and cons, to put it lightly. One of the dark sides of social media is how shady characters use it to make money. There are questionable business ventures, pump-and-dump investment schemes, and a whole lot of other money pits.
If you’re unfamiliar with these schemes and how they operate, it’s easy to get sucked into poor personal finance decisions. After all, the people that run them know exactly what to say. To know what to look out for, here are the most common financial scams you’ll see on social media.
1. MLMs
Multilevel marketing (MLM) is a business model where you sign up to sell a company’s products directly to consumers and earn commissions on sales. You can also recruit other people to do the same thing. Anyone who signs up under you is your downline, and you get a commission from their sales, as well.
People involved with MLMs often use social media to find potential recruits. Their pitches typically involve claims of how you can start…
