Some pointers to help you identify a Ponzi scheme or investment initiative:
- It offers very high returns on investments, with interest higher than that of any bank or authorised financial services provider.
- It is never widely publicised or advertised.
- It is normally a get-rich-quick scheme.
- It is not authorised by or registered with financial services providers, and is not accountable to anybody.
- And most notably, investors or participants primarily derive an income or return on investment from recruiting other participants.
Anyone who becomes aware of a Ponzi or related scheme can report it to the South African National Consumer Commission on (012) 761 3400.
Ponzi Scheme: A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors.
The Ponzi Pyramid. Image Courtesy: Mafia Today