Thousands of Jamaicans have lost their life savings in the latest pyramid scheme to rock the island.

So pyramid schemes are back in the news. Yup! This latest one involves a company called Warner Media. Not to be confused with Warner Brothers Studios, the American film and entertainment company. 

According to reports, some 50,000 Jamaicans were swindled out of millions of dollars thanks to this scheme that’s been going on for at least five years. 

So let me break down what happened. But first, here are some quick definitions.

Ponzi and pyramid schemes are both types of investment fraud. While the two phrases are often used interchangeably, there is a difference.

In a Ponzi scheme, investors give money to a portfolio manager – the person running the scheme. In return, they’re promised huge returns on their investments. When they’re ready for their money, they get paid out with the funds contributed by investors who joined the scheme after them.

A pyramid scheme, on the other hand, involves an initial recruiter finding and convincing investors to join the scheme by paying a fee. Those investors then recruit others and so on, and for each person recruited, the initial recruiter earns money. Like a pyramid, the person at the top benefits the most.

Now, most of the reporting on this Warner Media issue is calling it a Ponzi scheme but based on our research, it actually seems more like a pyramid scheme. 

Information on the actual company is sketchy, but we were able to confirm that a company called Warner Jamaica Media company is registered with the Companies Office of Jamaica, and its status is listed as active. Its address is even listed as Kingston, however, there are reports that it is based in the UK.

So back to the actual scheme.

Based on what we could find out, it looks like WM started back in 2019 as a quick and easy way for people to earn extra cash on the side. All you needed was a phone and internet, and you could be earning passive income. No muss, no fuss. Interestingly, according to the information on the COJ’s website, the company wasn’t officially registered until a few months ago, September 2023.

The company claimed to collaborate with YouTube and TikTok to increase video traffic for influencers, celebrities and artists. The platform allowed users to watch videos on TikTok and YouTube by simply clicking a button. And they get paid in USdt which is a digital currency for the US dollar, just for “watching” the video. 

Sounds harmless enough. Well, the kicker is, that before they got started, WM workers had to pay a work deposit, which according to the company’s promotional video was to “cover losses if a worker doesn’t complete their daily tasks.”

Daily tasks were assigned based on the level of employment, VIP 0, VIP 1 etc. Each level had a different number of daily tasks, the more tasks you completed the more money you’d make and increase your level.

Outside of that, workers could increase their payment by inviting others to the platform and creating a team.

Team members of course had to pay the deposit, and for every member that joins your team, you earn a commission. Each time your team member completes a task, you earn a commission. If your team member builds out a team for themself, you get a commission off that as well.

That’s why I say it sounds more like a pyramid scheme.

And they seem to have become very popular. Even doing charity work, and giving back to schools.

But as history has shown us with schemes like this, the cards always come crashing down. 

The company reportedly crashed in January, with many of its members taking to social media to say they haven’t been receiving their payout. Thousands of Jamaica invested in this platform and now they have nothing to show for it.

The thing about Ponzi and Pyramid schemes is that they need a consistent inflow of new people to keep the scheme alive. So once recruitment slows down, all hell breaks loose, and it looks like that’s what happened here.

The Financial Services Commission highlighted this in its response to the debacle. FSC also noted that Warner Media was not a licensed investment firm, which means no insurance from the government. 

And that’s the bottom line.