Recently, a friend presented a passive investment opportunity to me. After analyzing the information she provided, I figured the ROI for the first year would be over 1000%. That was a red flag. I did a quick Google search with the name of the company she provided. Information from Better Business Bureau (BBB) confirmed it was a ponzi scheme. I know my friend did not intend to scam me so I got back to her with the information I found and informed her I would not be investing in the business.
With the rise of the FIRE (Financial Independence, Retire Early) movement in the West, and the harsh economic realities in African countries like Nigeria, the promise of daily passive income from a low investment can appeal even to the most educated.
You might be thinking, “This scam seems obvious—it’s too good to be true.” But the friend who referred the business to me is educated, hardworking, and someone I respect for her business acumen as she has multiple sources of income. Today, I also got a message from someone else asking me to verify if the business was legit. Moreover, some of my educated friends have been victims of investment scams in the past. As smart, well-meaning individuals are genuinely struggling to tell what’s legitimate and what’s not, I decided to write this post.
Scams Are on the Rise—And Everyone’s a Target
Investment scams are common both in the United States and Nigeria — the two countires I am most familiar with. A recent example that illustrates just how devastating these scams can be is the collapse of CBEX (Crypto Bridge Exchange), a cryptocurrency investment platform that launched in Nigeria in July 2024 and promised up to 100% returns in just 45 days. For months, it attracted thousands of investors with its promise of AI-powered trading and daily profits. But like most Ponzi schemes, it eventually crumbled in April 2025, leaving many Nigerians stranded and out of pocket—some losing life savings. According to this Al Jazeera report, the total estimated losses may have reached ₦1.3 trillion ($840m). The case underscores the importance of verifying whether an investment is registered with regulatory bodies like Nigeria’s SEC and whether its business model is actually sustainable. No legitimate venture offers such astronomical returns with zero risk.
The truth is: fraud doesn’t discriminate. Scammers no longer rely solely on emails from distant princes. They’ve become more sophisticated, and their targets now include tech-savvy professionals, entrepreneurs, and retirees alike.
Why Ponzi Schemes Always Fail
Many of today’s “investment” scams are just updated versions of the classic Ponzi scheme—where early investors are paid returns not from any legitimate business activity, but from the money of newer investors.
In the case of the proposal I got from my friend, the return was allegedly $30 daily from a $960 investment, meaning you recover your capital in just 32 days, and everything after is pure profit, possibly in perpetuity as there was no indication the returns will end at a certain time.
Let’s do the math:
Annual return: ₦30 x 365 = ₦10,950
ROI: ₦10,950 ÷ ₦960 = 1,140% annually
Compare that to real-world investments like the S&P 500 index, representing 500 large US companies, which has historically yielded an average annual return of around 10% to 12%. So an investment promising over 1,000% ROI with no risk is not just unrealistic—it’s impossible. Such schemes only survive by continuously bringing in new investors. Once the inflow stops, the system collapses, and the last set of participants lose everything.
5 Ways to Spot a Scam Before It’s Too Late
Here are five things you must check before putting your money into any investment opportunity.
1. If It Sounds Too Good to Be True, It Probably Is
The promise of making back your capital in just one month with minimal risk should immediately raise red flags. In legitimate investing, high returns always come with high risk. Sustainable businesses don’t offer fixed daily returns without accounting for operating costs, market demand, and regulatory risk. The scooter business claimed it could generate $900 a month from a single $960 investment, which is impracticable.
2. Is the Business Registered or Licensed?
Always ask: Is this business licensed by a financial or regulatory body? In Nigeria, the Securities and Exchange Commission (SEC) regularly issues warnings about unlicensed operators on its social media platforms and website.
Before investing, search the business name in regulatory agencies like SEC Nigeria official website and find out if the company is registered with the Corporate Affairs Commission (CAC).
3. Who Is Behind the Business?
Legitimate businesses typically have:
- A physical address
- A verifiable team or founder
- A contact phone number and working customer service
In the scooter case, BBB indicated the company frequently changes its website domain—a common tactic used by scams—places heavy emphasis on recruitment over real services, and offers no verifiable details about its leadership, location, or legal documentation.
While many businesses are now able to operate fully online since COVID-19, a lack of a physical business or mailing address can signal a red flag. Also, if you can’t find credible press or information about a company’s founders, assume the worst.
4. Is the Business Model Sustainable?
Ask yourself:
- Where does the money come from?
- Is there a product or service being sold to paying customers?
- Are the costs of running the business accounted for?
In the scooter case, even if a scooter rental business were somehow profitable, the return model was mathematically unsustainable. There were no answers about theft, repair, or licensing. Just a magical promise of $30 daily, forever. Moreover, the company claims to generate income by renting out electric scooters purchased by investors. However, there is no evidence that any scooters are actually deployed or rented in real-world locations and their app was not found on reputable app stores like Google play and Apple App store. The so-called “daily returns” appear to come from new user deposits, not actual rental income—an indication of a Ponzi-style scheme.
Ponzi schemes don’t collapse because people stop investing—they collapse because they must. Eventually, there aren’t enough new investors to pay the earlier ones. That’s how the scheme dies—and your money goes with it.
5. If It’s That Good, Why Aren’t They Investing More Themselves?
This is perhaps the simplest, yet most powerful question you can ask. If the business is generating as much money as the company owners claim, why aren’t they investing more of the money they have made? Instead, they’re more interested in people joining than in building the business, proof there is no actual investment profits. Many of these schemes use “affiliate incentives” to lure victims into becoming recruiters. It’s a cycle of financial destruction dressed up as opportunity.
Final Thoughts: Trust, but Always Verify
When presented with a business opportunity, trust your instincts, but test them with research from reputable sources. A simple AI overview from a Google search can give you the information you need. If you’re ever unsure, talk to a financial adviser, an attorney, or someone who understands the market.
|If unfortunately you become a victim of scam, report to the appropriate law enforcement authority immediately!
Anne Mmeje 