Tag: pyramid scheme

The key to helping investors to better protect themselves from falling victim to investment fraud is to stay alert and be aware of the key characteristics and red flags associated with Ponzi and Pyramid schemes. Ponzi schemes have existed for over one hundred years and range in shape, complexity, and size. Investors are often promised extraordinarily high returns within a short period of time, with little or no risk.

The rising cost of living continues to tighten its grip on the economy, giving scammers, fraudsters and hustlers the green light to prey on those desperate enough (and potentially unaware of the dangers) to choose an easy way out of the financial hole they have fallen into.

Investment and financial fraud is on the rise across the world. Each day thousands of people are conned out of their hard-earned money by scams that have increasingly become sophisticated. There are dozens of ways scammers use to gain access to people’s accounts, often masquerading as being from financial institutions.

There are roughly 810,000 active stokvel groups consisting of over 11 million South Africans, collecting an estimated R50 billion annually. Nearly 40% of South Africa’s adult population are members of a stokvel. Recently there has been an increase in illegal pyramid schemes or Ponzi schemes, which continue to pop up around South Africa.

It’s no secret that South Africans are under pressure financially – with a slow economy, increasing electricity and petrol prices and slow wage growth. Many may therefore search for ways to make their savings work harder for them, and in so doing fall prey to short-term investments that offer unusually high returns.

SABRIC, the South African Banking Risk Information Centre, urges consumers to be sceptical of any investment that seems too good to be true, to prevent being deceived by so-called investments that promise quick, high and guaranteed returns.

In today’s tough economic conditions, the idea of receiving money for minimum labour and investment sounds extremely enticing. When something sounds too good to...