My cousin back home says his app pays 25% a month. Should I join?

The question

An illustrative letter.

The answer

My dear, I am glad you asked before you sent anything. Your cousin is not trying to cheat you. He believes in this, and his screenshots look real to him because, for now, the numbers keep rising. That is exactly how schemes like this spread: not through strangers, but through cousins, friends and church members who trust one another. You were wise to pause.

Can an investment really pay 25 percent a month?

Let's do the arithmetic. Twenty-five percent a month, added on each month, would turn your $2,000 into about $29,000 in one year. That is a return of more than 1,300 percent a year, every year. If any investment could truly do that, the largest banks and pension funds in the world would pour everything into it, and they would not need to find investors through church groups and messaging apps.

Real investments go up and down. Higher possible returns always come with higher risk of loss. The U.S. Securities and Exchange Commission lists "high returns with little or no risk" and "overly consistent returns" as the first two warning signs of a Ponzi scheme. A steady 25 percent a month is both.

How does a scheme like this work?

A Ponzi scheme pays existing investors with money collected from new investors. The organizers usually promise high returns from something that sounds modern and hard to check, such as artificial intelligence, crypto trading or secret signals. In truth, little or nothing is invested. The money from new members pays the early ones, and the organizers keep a share.

Because early members are paid, they tell their friends, and their stories bring in the next wave. The scheme needs ever more new money to survive. When new money slows, or when too many people try to cash out at once, withdrawals are delayed, then frozen, and the platform disappears.

This is not a distant warning. In April 2025, a crypto trading platform in Nigeria froze withdrawals and collapsed after promising returns of up to 100 percent in about six weeks. Nigerian authorities put the losses at more than a trillion naira, taken from ordinary savers across the country, many of whom had joined because a colleague or neighbor was already earning.

Why do the screenshots look so convincing?

Because the numbers on a screen are not money in a bank. The app can show any balance it likes. The only number that matters is the amount you can withdraw, in full, into your own bank account. Many schemes allow small withdrawals at first to build trust, then add fees, delays or reasons to stay in. The SEC warns that promoters sometimes offer even higher returns to people who agree not to cash out.

What are the other warning signs?

• Pressure to recruit. Bonuses for bringing in friends and family are a sign that new money is what keeps it running.
• No registration. Real investment firms and the people selling them must be registered or licensed with regulators. Anyone honest can tell you where to look them up.
• A strategy nobody can explain. If you cannot understand how the money is made, or get a clear answer, walk away.
• Unusual ways to pay. Requests for crypto, gift cards or transfers to a personal account are serious red flags.
• Urgency and secrecy. "Join before the window closes" or "don't tell outsiders" are pressure tactics.

The checklist further down gathers these in one place, so you can check any offer that comes your way.

How do I warn my cousin without losing him?

Go gently. If you call it a scam outright, he may defend it, because admitting it means admitting his money, and perhaps his friends' money, is at risk. Instead, ask questions. Is the company registered with the securities regulator back home? Can he withdraw his whole original amount today, not just the profit? You might suggest he try taking out what he first put in, simply to be safe. If the withdrawal is delayed or refused, he will have his answer, and it will come from the app, not from you.

If he or anyone he knows has already lost money, encourage them to report it to the securities regulator in their country. Here in the United States, the SEC, the Federal Trade Commission at ReportFraud.ftc.gov and the FBI's Internet Crime Complaint Center at ic3.gov all take reports. And warn them about recovery scams: people who have lost money are often contacted by someone offering to get it back for a fee. That is a second scam.

What can my $2,000 do instead?

Your $2,000 is precious, and you earned it. Many people keep their first savings in an insured account at a bank or credit union, as an emergency fund, so that a surprise bill never becomes debt. Once that cushion is in place, retirement accounts and broad, low-cost funds are the slow, steady way wealth is built. They will never promise you 25 percent a month, and that is exactly why you can trust them more.

One last thing, my dear. I will never message you, or anyone, offering an investment. If someone writes to you in my name with an opportunity, it is not me.

You did the right thing by asking first. Protecting what you have is the first step to building more.

One thing to do this week

Move your $2,000 into an insured savings account in your own name, and send your cousin one question: can he withdraw everything today?