A screenshot of one of the posts (um, PYRAMID) being sent around on Instagram

The Gen Z Pyramid Scheme Sweeping Instagram

Teens are participating in flash money exchanges via Venmo under the pretenses of a $1200 windfall following a $150 contribution. I’ve previously covered how broke college students crowdsource beer money using Venmo, but this is on another level.

Here’s how it works:

  1. You see one of your friends posting a chart with a name at the top. Below it are 2 more names, which split into two more names below, and then the same again. So, that’s 15 spots for names in the shape of a family tree (or, ahem, a PYRAMID) with 8 at the bottom rung.
  2. Followers wanting to ‘buy in’ send $150 to the person at the top in order to enter on the bottom level. Some posters assign a color ‘star’ to each level to help communicate how far away you might be to your big payout.
  3. Once all the bottom level buy-ins have been made, the tree splits into 2 and everyone moves up one level and has to help recruit the next 8 people for the tree they remain on.
  4. Once those spots have been filled, you move up again, and again, until you’re at the top spot. When you’re at the top, it’s your Venmo username being advertised and you collect the $1200 the 8 newbies at the bottom send your way. That’s your ‘cash out’.
Instructions being sent out to confused teens.

Let’s get this straight though — teens are sending $150 to friends of their friends, so, effectively, paying strangers on the internet (and $150 is not a small number to most young people). It’s like if a Nigerian prince swindle had a baby with a knife salesman, but it’s local and you don’t even end up with a set of surprisingly nice knives.

The screenshot on the right is the public Venmo feed of the person at the top of the chart (do they not see its a PYRAMID SHAPE?!) on the left.

It happens fast and creates a huge sense of urgency, especially considering the announcements are posted ephemerally. The credibility of Venmo adds a sense of legitimacy to confused teens, which makes it dangerous for kids who might ordinarily think they’re aware of scams and how to avoid them.

The app is instantaneous and public by default (though you can make any of your transactions private, and the actual monetary value is always private), so anyone scrolling through their Venmo feed will see a bunch of exciting looking payments back and forth, which may prompt some to jump in on the action for fear of missing out.

It’s also essentially proving to kids that the process “works” because they’re seeing all their friends getting paid. Pyramid schemes are sketchy, but guys omg, this thing actually works, see?

The trend has been picking up speed over the last few weeks. My colleague, Danielle and I, could only find examples on Instagram stories but it’s entirely possible that it’s spreading on Snapchat too and we just don’t have the right friends.

So what’s the problem?

Well, it’s illegal. And when the hype dies down, there will be a lot of disappointed buyers (in multiples of eight, lol) who collectively can’t find enough people to push them to the top of the pyramid. It also asks the question whether the thrill of playing the game will outweigh any losses to some players, which is scary in itself.