Despite widespread awareness of the dangers of Ponzi schemes and various forms of investment scams, people still fall victim to these frauds daily. 

Even when these Ponzi schemes look too good to be true, people still fall prey to these practices. While economic realities have been a defining contributor that fraudulent individuals leverage on, it shouldn’t be the reason an individual loses their hard-earned money. 

To keep you safe from investment fraud, this article has been dedicated to making you understand the anatomy of Ponzi schemes. You’ll also be exposed to easy signs to spot these schemes and how to avoid them.

What you should know about Ponzi Schemes

Ponzi schemes are forms of fraud that lure investors and pay profits to earlier investors with funds from more recent investors. 

They mislead investors by falsely suggesting that profits are derived from legitimate business activities, whereas the business activities are nonexistent. These individuals also exaggerate the extent and profitability of their legitimate business activities, leveraging new investments to fabricate or supplement these profits. 

A Ponzi scheme can maintain the illusion of a sustainable business as long as investors continue to contribute new funds. The scheme can continue to exist as long as most of the investors do not demand full repayment or lose faith in the non-existent assets they are purported to own.

Also Read: Job scam: Nigerian health worker narrates how he fell for fake UN job online.

The Psychology of Ponzi Schemes

According to Psychologists, Ponzi Scheme perpetrators rely on the following tactics:

• Deceit: They present themselves as trustworthy experts and come through your trusted associates.
• Desperation: They target your financial worries.
• Delusion: They offer unbelievable returns.
• Demand: They create a false sense of urgency to lure you as fast as possible.

Most times, people are lured into investment scams through their close friends, families or individuals they trust. These have been a major factor in Ponzi schemes continuing to gain momentum despite public awareness. 

Easy signs to spot a Ponzi scheme 

These easy signs, which are common to all fraudulent investments, will save you from falling victim. It’s not only enough to know these signs, but also to be consciously alert. 

1. “Act Now or Miss Out!” is a classic tactic

2. Be suspicious of promises of “guaranteed, zero-risk returns.

3. If the returns sound too good and too fast to be true, they probably are not true.

4. If you can’t understand how the investment makes money, stay away.

5. Be cautious of unexpected offers, even from close contacts. Always do your own financial due diligence, independent of the relationship. 

6. When you are asked to pay a certain amount to get money, it’s definitely a scam.

7. Schemes that lay on tree setup. The more you bring people, the more you have a chance of earning. Investments like that are only increasing the number of victims through you.

8. Promised instant returns on investments with no risk, no effort and no reasonable calculations on the returns.

9. When you’re pressured to act fast on an investment, it gives you little or no time to think. Beware!

10. An investment platform with a shady-looking website or no recognised physical location. Stay away from such. 

11. When payments of investment returns are only through crypto or gift cards, it’s likely a Ponzi scheme.

12. When details of the founders or the real face behind the investment schemes are unknown. 

How to avoid being a victim of a Ponzi scheme

1. The first rule to not being a victim is to be aware that anyone can be a victim of a Ponzi scheme.

2. Don’t act too fast on investments that offer high returns with little or no risk.

3. Before investing, do your own personal research on the company’s status. See if they are registered with the Securities and Exchange Commission (SEC).

Notably, a platform registering with the Corporate Affairs Commission (CAC) isn’t enough to run an investment. It must be registered with the SEC.

4. Know the individuals behind the scheme. It isn’t enough to know every face but be certain they have a recognised presence on social media.

5. A legitimate investment will be open to give you a clear explanation of how the investment works. 

6. Restrict your investment to legitimate platforms such as the Nigerian Stock Exchange, Financial Institutions and authorised fintechs.

7. Follow your instincts. Sometimes, your mind acts like a Prophet who has seen the future. If your mind says otherwise, try to comply. 

Note that it’s better to lose in a legit investment than get scammed in a fraudulent scheme. 

Investments flagged as Ponzi Schemes so far in 2025

Below are the investment schemes red-flagged by the regulatory authority in 2025. 

• Gvest Global/Gvest
• Omegapro
• Tofro Crypto Exchange
• Forsmand and Bodenfors Limited (F&B)
• Value Growth Platform
• CMTRADING
• Zugacoin and Samzuga GPT
• CBEX
• Punishor Coin ($PUN)
• Silverkuun Investment Cooperative Society/ Silverkuun Limited
• Property World Africa Network (PWAN)/ PWAN MAX
• Pro-vest
• My Shores and UYJ Multi Trade Limited 

Earlier this year, the Economic and Financial Crimes Commission (EFCC) blacklisted 58 companies for engaging in illegal and fraudulent activities.

EFCC highlighted that the companies are not registered under the Central Bank of Nigeria (CBN) or the SEC. Also, both regulators denied their regulatory operation approval.

You can find the list here.