The Central Bank of Kenya has previously issued warnings about the prevalence of online pyramid and ponzi scams.
| File | AFPNews
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Online Ponzi schemes stealing billions from ‘greedy’ Kenyans
Julius does not consider himself employed, but he lives in a spacious three-bedroom house and also drives a car that gratifies his soul. His work, as he puts it, is to invest in online apps that have become all the rage during the pandemic.
Last week, however, he watched in shock as his Sh300,000 disappeared from his account. He had ‘invested’ the money in an online ponzi-like scheme disguised as an e-commerce and referral app namely Amazon Web Worker Africa.
Days later, the app was deleted from Google Play Store without official communication to its users.
Julius says he is always careful and once he invests his money, he never keeps it for long but withdraws it with a substantial profit and moves to the next new app.
“This one caught me unawares. I was a little late to invest. When I placed my money, it folded within three days. Normally, these types of apps take two or three months before they disappear. I know the trend. This was faster. It came, got the millions it targeted and vanished,” he said.
Curiously, he says he has no hard feelings against the scammers, but feels sorry for those who lost everything. “You have to know how to play the game,” he says. “Be smart, like they are.”
Last month the app, which rode on the brand name of the American e-commerce giant Amazon, charmed its way into hundreds of Kenyans’ digital wallets with offers of quick riches. For people desperate for a quick route to success, this was the perfect opportunity.
Online pyramid and ponzi scams
To earn a commission, members were to deposit any amount starting from Sh300 and complete certain tasks at different levels. One could also earn either through referrals or by locking the money for a specific period. For instance, funds saved for seven days promised a return of about 24 per cent, and if you extended the period to a month you had a 50 per cent profit.
By the time the app dissipated, thousands of Kenyans, who flooded Facebook, Twitter, Instagram and WhatsApp with posts of frustrations, had opened accounts with the app and started referring friends and family members to join in.
This is not the first time Kenyans lost money through online scams, though. A social media scan by the Nation identified over 30 fraudulent ‘investment platforms’ that have capitalised on Kenyans’ greed for quick cash.
Prof Bitange Ndemo, a professor of Entrepreneurship at the University of Nairobi’s Business School, told the Nation that Kenyans will continue to be conned if they don’t realise that real investments take time to mature.
“Many vulnerable Kenyans are searching online for exchanges and apps where they meet conmen. The Internet has as many fake people as there are genuine ones.”
The Central Bank of Kenya has previously issued warnings about the prevalence of online pyramid and ponzi scams that encourage one to invest to receive a big return with no risk.
