FIVE QUES­TIONS ABOUT PYRA­MID SCHEMES

DRUM - - Money -

What’s the com­pany’s history and ac­cred­i­ta­tion? In­vest­ment busi­nesses must be reg­is­tered with the Fi­nan­cial Ser­vices Board (FSB). Don’t be­lieve all the framed de­grees and diplo­mas on the wall – check each com­pany and ad­viser’s ac­cred­i­ta­tion on the FSB web­site.

What’s the con­tact in­for­ma­tion? Be­ware com­pa­nies that don’t have a phys­i­cal ad­dress or of­fi­cial web­site but in­stead use Gmail, Hot­mail or Ya­hoo e-mail ad­dresses.

Do I un­der­stand the busi­ness model? Be­ware com­pli­cated com­mis­sion struc­tures, and re­mem­ber that re­turns on le­gal in­vest­ments don’t de­pend on the re­cruit­ment of new in­vestors.

How do they dif­fer from a stokvel? Stokvels are sav­ing clubs and not fraud­u­lent schemes. The mem­bers of a stokvel all know one an­other and save money to­gether ev­ery month. It doesn’t de­pend on the re­cruit­ment of new mem­bers.

How do they con­tact me? Ac­quain­tances might try to re­cruit you by e-mail, or you might see an ad­vert on a site such as Gumtree. The ads usu­ally ap­pear to be le­git­i­mate.

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