Pyramid Schemes
Fraudsters aim to make their business seem legitimate. This means they will often use technical jargon, impressive job titles and mock websites to look credible. If you have any suspicions about a scheme’s authenticity, you should investigate the company’s status and contact details. Pyramid schemes promise high profits by making one payment and finding a set number of others to become distributors of a product. The scheme typically does not involve a genuine product. The purported product may not exist or it may only be “sold” within the pyramid scheme. Such claims should therefore be treated with extreme caution or scepticism.
Are you a victim of pyramid scheme fraud?
· You’ve been approached about a multi-level investment scheme that offers great-sounding profits with little or no risk.
· You’ve paid a fee to join the scheme.
· You’ve enrolled others on the scheme and already earned money from your efforts.
What should you do if you’re a victim of pyramid scheme fraud?
· Report the fraud to relevant authorities[JPQ1]
· If you think you are actively participating in a pyramid scheme, break off contact with the fraudsters immediately and don’t invest any more money
· If you have given the fraudsters your bank account details or credit card details, alert your Bank or Credit Card Company immediately.
· Keep any written communication you have received from the pyramid scheme. It may help you give evidence to the authorities.
· Be aware that you are now likely to be a target for other frauds. Fraudsters often share details about people they’ve successfully targeted or approached, using different identities to commit further frauds
· People who have already fallen victim to fraudsters are particularly vulnerable to the fraud-recovery fraud. This is when fraudsters contact people who have already lost money through fraud and claim to be law enforcement officers or lawyers. They advise the victim that they can help them recover their lost money – but request a fee.
Protect yourself against pyramid scheme fraud
· If you’re considering any type of investment, always remember: if it seems too good to be true, it probably is. High returns can only be achieved with high risk.
· Pyramid schemes often involve products that are overpriced and have no real resale value. You should think about the true value of your investment before convincing friends and family to join the scheme.
Members of the public are asked to note some warning signs of these Pyramid Schemes:
Warning Signs
1. Pyramid promoters are masters of group psychology;
2. Recruitment meetings create a frenzied, enthusiastic atmosphere where group pressure and promises of a large sum of money play upon people's greed and fear of missing a good deal;
3. Promoters also openly discourage thoughtful consideration and questioning of the scheme;
4. Victims often find themselves tricked into participating;
5. At a recruitment meeting, you might hear phrases like "this is a ground floor opportunity which will change your life", "opportunities don't go away, they go to other people", and "if you act now and work hard for three to five years, you can retire and live off of the residual income."; and
6. Another warning sign is a confusing compensation plan.
Do not invest what you cannot afford to lose and make sure that you understand all the procedures and risks investigate to ensure that the person offering the investment is properly licensed and has a reputable business history;
The FSC warns that if these companies do not disclose information on the risks involved or tell clients otherwise then they would be involved in illegal schemes.
Report
If you think you might be involved in a pyramid scheme, stop participating in the scheme immediately and contact Mr. Adrian Dale, Head of the Financial Investigation Unit, Royal Virgin Islands Police Force at (284) 494-3822 ext. 5084. You should also warn other people you think may have been approached about joining the scheme.