One of the most prominent recent examples involves a pyramid scheme called Lightning Shared Scooter Company (LSSC). This scam has reportedly fleeced millions of dollars from investors, with reports of claimed losses reaching into the hundreds of thousands from North America alone, according to the Better Business Bureau.
How the LSSC Scam Worked
The LSSC scam operated as a classic pyramid scheme, often targeting communities and spreading through word-of-mouth. Here’s a breakdown of its key components:
The Promise:
- Investors were told they could make money by investing in the company, which would then use their money to buy electric scooters for a sharing network. They were promised high returns based on the rental income of these scooters.
The Reality:
- There were no scooters. The company had no real, revenue-generating business. Instead, the money paid to older investors came directly from the investments of new recruits.
Recruitment-Based Tiers:
- The business model relied heavily on a multi-tiered system where investors were incentivized to recruit new people. They were promised higher payments or “manager” status as they brought in more recruits.
Red Flags:
The scam had several clear red flags, which are common to many pyramid schemes:
Recruitment-based income:
- The primary way to make money was by recruiting others, not from a genuine product or service.
No tangible product:
- Investors were asked to put money into a “company” with no visible scooters or verifiable business operations.
High-pressure sales tactics:
- Scammers pressured people to invest quickly and to recruit friends and family, leveraging personal relationships to get people to join.
Payments via unsecure methods:
- Some of these schemes have used cryptocurrency or other non-traditional payment methods, which offer less consumer protection than credit cards.
Also Read : Mortgage Fraud Red Flags
Other Types of Electric Scooter Scams
Beyond investment fraud, other scams have targeted individuals looking to buy electric scooters:
Fake Online Stores:
- Scammers create professional-looking websites that advertise popular electric scooters at incredibly low prices. Customers pay for the product but never receive it, or they receive a cheap, non-functional item.
“Bait and Switch” Schemes:
- A company advertises one product but delivers a different, lower-quality item after payment.
Fake Booking and Delivery Scams:
- Scammers create fraudulent websites or call centers for legitimate companies (like Ola Electric in India, for example) to trick people into paying for scooters that are never delivered.
Summary Table
| Aspect | Details |
|---|---|
| Scam Name | Lightning Shared Scooter Company (Ponzi-style) |
| False Promise | Passive income from electric scooter rentals |
| Reality | No actual scooters, payouts came from new investors |
| Scale | $250K+ lost in Salinas; $50K maximum per victim |
| Targeted Communities | Including non–English speaking groups like the Oromo |
| Red Flags | Recruitment-based returns, unverifiable company, lack of actual product |
Official Alerts
Minnesota Attorney General Keith Ellison issued a public warning after receiving complaints mirroring this scam format:
Promises of returns based on scooter rentals—but with no actual scooters existing.
Investors were recruited via referrals, and payments were often tied to bringing in new people.
AG Ellison urged caution: check for proper registration, corporate presence, and avoid schemes requiring you to recruit people.
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