What did Charles Ponzi do - and is money flipping the dumbest scheme yet?
This is Money Podcast
This is Money
4.1 • 650 Ratings
🗓️ 25 May 2018
⏱️ 48 minutes
🧾️ Download transcript
Summary
Ever heard of money flipping? It’s a new scheme doing the rounds on Facebook and social media that promises to turn your £50 into potentially thousands.
So how do you do that? Simple really, you pay others to get onto the bottom rung of a pyramid and then recruit more people to move you up a level and get paid yourself.
What makes it so dumb is that it doesn’t even try to have the legitimate veneer of famous pyramid schemes of the past. It’s a Ponzi scheme, plain and simple, but what is one of those and who was Charles Ponzi, the man the scams are named after.
On this week’s podcast, Simon Lambert, Lee Boyce and Georgie Frost step back to America in 1920 to find out how Ponzi soared and then crashed – and look at the new money flipping scheme that has brought a trick as old as time to today’s digital age.
Also on this week’s podcast, we look at TSB customers who are unfortunate enough to get scammed themselves after the bank’s meltdown and how it is failing them.
And we take a look at whether the FTSE 100’s sudden 14% rise on its way to new record highs can still mean it is an unloved investment – and find out where pension millionaires invest.
Enjoy.
Transcript
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| 0:00.0 | Welcome to This Is Money podcast in partnership with NS&I. I'm Georgie Frost and alongside editor Simon Lambert and I today is Consumer Affairs editor Lee Boyce. And coming up, social media is in the firing line again, but this time for a very old fraud. Also, as scammers plough into the TSB IT debacle, The bank comes under fire for not helping victims. |
| 0:23.1 | Plus Virgin Media is in trouble for overcharging customers who want to leave. |
| 0:27.7 | Also coming up, we look at whether now is the time to buy unloved UK shares |
| 0:32.5 | and how you can become a pension millionaire. |
| 0:35.9 | Don't forget you to stay up to date with all the latest |
| 0:37.5 | breaking money news, just go to this ismoney.co.uk or download the app. |
| 0:43.1 | This is money brought to you in partnership with NS and I, giving you 100% security for your |
| 0:49.2 | savings, backed by HM Treasury. |
| 0:52.7 | But first, Ponzi schemes, that's essentially robbing Peters to pay Paul a quick buck. |
| 0:57.0 | They've been around for almost a century. |
| 0:59.0 | Perhaps the most famous involved a certain Bernie Madoff, |
| 1:01.0 | but to a lesser degree, they are still doing the rounds. |
| 1:04.0 | And in a sign of the age, it's social media users who are being targeted. |
| 1:08.0 | This is money, have been alerted to the get-rich-quick pyramid schemes, |
| 1:12.9 | which action fraud UK have confirmed that one of the ads, doing the rounds, fits the description of a Ponzi scheme. |
| 1:19.4 | So first, a very warm welcome to you both. A little bit of history, why not? It's a very interesting history after all. |
| 1:25.9 | What exactly is a Ponzi scheme? How did it all start? How do they work, Simon? So a Ponzi scheme is something that many people will have heard the term, but they might not know the history of. And the history of it is actually pretty interesting. There was a man called Charles Ponzi. And he was an Italian-American who in 1920 came up with the scheme that delivered |
| 1:46.5 | this label. And it was essentially a way of taking money off new investors and giving it to |
| 1:54.2 | existing investors who had been promised a very large return. And when those existing investors |
| 1:59.6 | got paid their very large return, |
| 2:01.5 | they told everybody about this and more new investors came in and they helped pay the level |
| 2:06.1 | of investors above them. And it's essentially a pyramid scheme. And Ponzi arrived in the US from |
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