Pyramid scams involve multilevel recruiting that leave those at the bottom out of pocket after having bought into a product or investment
The hooks of quick money are sharp and authorities have warned against taking easy bait.
Three women were recently scammed of an amount close to R100,000 in Mpumalanga, prompting police to remind potential investors to do their homework.
Unsolicited offers, text messages from unknown numbers and the incentive to recruit others are all big red flags, police have said.
Lucrative investment returns
The three women from Kamhlushwa near Tonga aged between 26 and 51 fell victim to a suspected pyramid scheme that police believe is growing in the province.
Their sour investment began when one of the women received an offer via text saying she could receive a large return in a short space of time.
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After parting ways with an undisclosed amount of money, the promised rewards materialized and the woman was temporarily enriched.
She later presented the offer to two friends who were tempted to invest large sums with the hope of the same result.
“A few days later, they came to realize that the application was no longer active. They went to the bank to enquire about the account and learned that the account was blocked,”
Realising that they had lost almost R100,000 to a scammer, the trio reported the matter to police in October.
‘Verify credentials’
Police have asked potential scam victims to report the information they have, ensuring that such material can be shared anonymously.
“We urge our people to do thorough research and verify the credentials of companies they invest in before doing something that they will regret at the later stage,” warned Mpumalanga police commissioner Major General Zeph Mkhwanazi
The Major General added that chasing easy returns will only bring “calamity”.
He urged people not to recruit others and to do their research on companies before investing.
What info to use when reporting a scam
The South African Banking Risk Information Centre (Sabric) reiterated the police’s advice.
“Conduct thorough research on any investment opportunity to verify its legitimacy through trusted sources, such as financial regulators and official company websites,” Sabric Head of Media and Communications Ntshiki Maluleka told The Citizen.
“This will help them make informed decisions and avoid falling victim to these scams”, he advised consumers.
When reporting fraud or scams, Sabric advised keeping a report of the following information:
- Name of fraudster company and website if available
- How they first connected with the investor (Online, Facebook etc.)
- Bank account number of the account the deposits were made into
- Date/s of transactions
- Any contact numbers or email addresses supplied by the fraudster
- All available emails or mobile phone communication made with the fraudster
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The Citizen
www.citizen.co.za
