I've been in these lootmaster parties before and while I don't think it's automatically a scam (as that implies an intention to mislead and some leaders are willing to stick it out for the rest of the group), I do avoid them now. It simply takes too long to drop eight mounts and there is no way that everyone will stick around long enough to get one. I've never seen more than the first three people in a LM party get their mount before people- not even necessarily those who got the drop -had to start leaving. It's one of those things that sound good on paper but completely falls apart in reality.

To the OP you can either stop running LM parties or block/report people for harassment.