5 Smart Ways to Identify and Avoid Ponzi Schemes in Nigeria

Ponzi schemes are illegal and fraudulent investments with little to no risk. These schemes work by paying early investors from the money received from new and later investors. Like a pyramid, ponzi schemes are get rich quick platforms and always sound too good to be true. They rely on the consistent flow of new investments to continue to provide returns to older investors. In Nigeria, so many people have fallen victims of these schemes time after time with MMM (Maurodi Mundial Movement) as one of the most popular, which actually crashed between 2016 and 2017.

In 2023, people are still getting scammed through various means: pyramid schemes, false crypto investments, and Ponzi schemes. The best way to avoid a scam is to arm yourself with knowledge. Know enough to spot a scam a mile away. 

In reality, there is no free money anywhere and as such, Ponzi schemes are just some unrealistic money doubling situation which favors only the first few set of people that engages in it rather than as an investment. Sometimes, it might be quite confusing to identify Ponzi schemes especially because they make it look really attractive with well planned out tactics. Some of them seems very convincing by their offices, social media accounts, websites, company accounts, CAC( corporate affairs commission) registration,corporate social responsibility,endorsements from influencers and celebrities and so on. However, you do no have to be financially literate or have special skills before you can identify and avoid falling victim to these Ponzi schemes. The following are Five (5) smart ways in which you can easily identify and avoid Ponzi schemes especially in Nigeria.

1. It promises Incredible and Extraordinary Returns on Investment (ROI)

One of the smart ways to quickly identify Ponzi schemes is when they are offering returns on investment that seems extremely too good to be true. An investment that promises you 300%, 350% returns on investment in 7 days, 2 weeks etc is nothing but a scam. As an older investor, you might be lucky enough to cash out a couple of times because that’s the tactics anyways but eventually it will crash and all your money will be gone. When you stumble upon an investment scheme that makes this type of promises it is best to avoid it and find other legitimate means to invest.

2. Too many people are referring you to the same platform to invest:

If you are getting way too many people around you referring you to just a particular investment scheme, know that they have only their interest at heart and you are just a bait to making their own money. Remember that these Ponzi schemes work using multiplier effect of people. So, they make their current investors to continually source for others to join in order to get access to their own money and the cycle continues until it no longer works anymore and then crashes.

3. They don’t comply with regulatory agencies:

Many scams and Ponzi schemes go as far as registering as a business under CAC, but before going ahead to invest, don’t be convinced by their presence as a registered business. Take further steps to confirm if they are in compliance, licensed and identified by regulatory agencies such as Securities and Exchange Commission (SEC), Ministry of Finance, Nigeria Deposit Insurance Corporation (NDIC) etc. Carrying out these background check may seem like a time waster but I’d rather you waste time than waste money. If you find out they are not in compliance with these stated agencies then it’s best to avoid the investment.

4. The business strategy is vague and non verifiable

If you are dropping your money for an investment, it’s only reasonable to know what exactly you are investing in and in clear terms. But when they can’t clearly analyze the business or investment  strategy that your money goes into or trying to keep it secret then something fishy is definitely going on. For example, if it’s stated that they invest in Agriculture without actual explanation of which type of agricultural produce, how it works and all of that then you should reconsider trusting them with your money.


5. You encounter difficulties receiving payment

If you put your money in an investment scheme which you seem confident in but you are encountering difficulties accessing and receiving your payment even though your excessive returns has always come in consistently overtime, it is likely that the scheme’s bubble is about to burst and that’s how you recognize that you are investing in a Ponzi scheme. If you are able to get your money before it wraps up, take it and never look back again but if not try not to keep getting people to invest in order to cover for your loss and be your brother’s keeper. This way you might not be able to save your self but you sure can save others and make them realize it’s not a safe investment scheme.


Have you ever been scammed? Or are you currently being scammed and you don't even know it? In whichever case, it is important to note that identifying and avoiding these scammers as individuals can definitely go a long way in saving us the physical, emotional and psychological stress that comes from money loss but as a society and country at large we need strict and proper regulation of participants in the financial sector. Some of the initiators  of these Ponzi schemes have gone scot free leaving their victims financially drained and they have no one to hold accountable. Therefore , as individuals we should try to contain our greediness for accumulating so much money in a short period of time, because this is why they get most people to fall victims. Diligently make thorough research in your choice of investment scheme, hire a financial advisor if you can, commit to learning about how to legitimately grow your finances and stay clear of red flags that can harm your financial life.


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