A Ponzi Scheme is an incredible way to earn ISK, boost investor confidence, and continue to perpetuate a scam for a long period of time.
Wikipedia defines a Ponzi Scheme as the following:
"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going."
A Ponzi Scheme is incredibly simple, and actually takes very little effort to build. The majority of the work will come down to getting the initial investors interested, and slowly paying them out to build their confidence. In earlier chapters of this guide, I make reference to an investment fund I run on my character Deison.
Deison's Investment Fund is a Ponzi Scheme in EVE. You can see the website here. In this case, the bulk of the work came from developing the website. It is used as the main confidence builder for potential investors. It appears as if it has had a decent amount of time invested into it. It also looks as if it has been running for quite some time. If you don't bother doing any futher research, you might just think it's legitimate. Many players do.
The investor list on that page is 100% real investments. Originally, it was populated with fake entires that looked as if they had been around for awhile. The key element that makes the concept so successful is that it doesn't actually pay out any interest. The "Investment Fund" pays its investors 15% per month. However, they have to request when to actually withdraw their earned interest. In addition to that, withdrawing ISK has a fee associated with it. This has the added benefit of making investors wait longer to withdraw their earnings.
Most investors are very cautious. They like to start small, eventually upping their investments. These investors should be paid out any time they request their ISK. This helps build confidence. Even up to a few hundred million ISK, it's not a huge loss to pay 15% interest over a month. Keep in mind that new investors will constantly be joining.
There are two benefits of paying out your smaller investors. First, it has the potential of receiving even larger investments from these individuals. Second, it's also very likely that they will tell their friends about you. And finally, they will be very happy to act as a reference for you, any time you're trying to get new investors.
Once an investor reaches a certain point, 500 million ISK, for example, it's no longer beneficial to pay them if they decide to withdraw all of their investment. Once they realize you're scamming them, they will likely do very little about it. The worst possible scenario is that they post about it somewhere on the forums, and it gets drown out by other threads. Even if 500 people see the thread and believe it, you won't likely lose any future investors. The target audience for a scam like this doesn't read the forums, much less care to do any research.
Keep in mind that a Ponzi Scheme does not have to use a website like this. In this case, the website is to persuade individuals from in game. The target audience are players that are in game, don't read the forums, and don't research investments very thoroughly. You can certainly run a Ponzi Scheme on the forums, but it requires a significantly different approach, which will be covered in the "Market Discussion" chapter.
This page last updated: 2010.02.25
Wikipedia defines a Ponzi Scheme as the following:
"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going."
A Ponzi Scheme is incredibly simple, and actually takes very little effort to build. The majority of the work will come down to getting the initial investors interested, and slowly paying them out to build their confidence. In earlier chapters of this guide, I make reference to an investment fund I run on my character Deison.
Deison's Investment Fund is a Ponzi Scheme in EVE. You can see the website here. In this case, the bulk of the work came from developing the website. It is used as the main confidence builder for potential investors. It appears as if it has had a decent amount of time invested into it. It also looks as if it has been running for quite some time. If you don't bother doing any futher research, you might just think it's legitimate. Many players do.
The investor list on that page is 100% real investments. Originally, it was populated with fake entires that looked as if they had been around for awhile. The key element that makes the concept so successful is that it doesn't actually pay out any interest. The "Investment Fund" pays its investors 15% per month. However, they have to request when to actually withdraw their earned interest. In addition to that, withdrawing ISK has a fee associated with it. This has the added benefit of making investors wait longer to withdraw their earnings.
Most investors are very cautious. They like to start small, eventually upping their investments. These investors should be paid out any time they request their ISK. This helps build confidence. Even up to a few hundred million ISK, it's not a huge loss to pay 15% interest over a month. Keep in mind that new investors will constantly be joining.
There are two benefits of paying out your smaller investors. First, it has the potential of receiving even larger investments from these individuals. Second, it's also very likely that they will tell their friends about you. And finally, they will be very happy to act as a reference for you, any time you're trying to get new investors.
Once an investor reaches a certain point, 500 million ISK, for example, it's no longer beneficial to pay them if they decide to withdraw all of their investment. Once they realize you're scamming them, they will likely do very little about it. The worst possible scenario is that they post about it somewhere on the forums, and it gets drown out by other threads. Even if 500 people see the thread and believe it, you won't likely lose any future investors. The target audience for a scam like this doesn't read the forums, much less care to do any research.
Keep in mind that a Ponzi Scheme does not have to use a website like this. In this case, the website is to persuade individuals from in game. The target audience are players that are in game, don't read the forums, and don't research investments very thoroughly. You can certainly run a Ponzi Scheme on the forums, but it requires a significantly different approach, which will be covered in the "Market Discussion" chapter.
This page last updated: 2010.02.25