Beware of scams
Don’t be lured by investment opportunities that promise big amounts of money in return, warns Xoliswa Mhlaba
BECAUSE of big amounts of money involved in a stokvel, scammers are always trying to get their hands on this hard-earned cash. And if there was ever a time for stokvels to be careful, it is now. There are many scams that either pose as stokvels or target stokvels. You and your stokvel need to educate yourselves to avoid being victims.
According to financial educators, Busi Skenjana and John Manyike, pyramid schemes are currently the biggest danger to stokvels.
“At the moment, there are pyramid schemes that are designed as stokvels. They promise high returns and people are tempted to put some of their money there. This is a big risk,” says John, who is head of financial education at Old Mutual.
These pyramid schemes encourage you to recruit other people to join. The more you recruit, the better your returns. This can be tempting for stokvel members who believe that if they invest their money in these schemes, they will get bigger profits for their stokvel.
Busi, who is the CEO of BSK Marketing, advises stokvels not to be lured by investment opportunities that promise big amounts of money in return.
“Get-rich-quick schemes have never really made anyone rich. They have only succeeded in making people poorer,” she says.
There is a rise of social media stokvels, which can be dangerous. This involves depositing money into a stranger’s bank account and all communication is via a Whatsapp group.
According to John, stokvels are founded on trust, so it’s important to know the people you are in the stokvel with. This makes it easy to hold someone accountable.
With the Whatsapp stokvels and other social media stokvels, people can disappear with your money. Be careful before getting your group involved in these kind of stokvels.
Ensure that everyone in a stokvel can be accounted for. Know where they stay and where they work so that you can be able to reach them in case of they have not paid what is due, or trying to scam the stokvel.
HIGH INTEREST RATE INVESTMENTS
Look out for investment opportunities that promise your stokvel high returns. The scammers even have so-called investors who will give testimonies of high returns when they invested in the so-called project.
They can convince your stokvel to invest with them instead of putting money in the bank. In most cases, these investment companies collapse before any money is paid out.
“Look out for any savings scheme that promises extremely high interest rates,” says Busi.“if it sounds too good to be true, it probably is. Bank interest rates might be lower, but they guarantee that your investment is safe.”
This tends to happen to stokvels that physically handle money. The stokvels are targeted on days when they collect or distribute money. And in most cases, it is an inside job. The robbers get a tip-off from someone within the stokvel.
“This usually happens when there is a newcomer in the group or someone who has not made a contribution for a while. That is why it is important for stokvels to be careful when they approve new members,” says John.
Is your stokvel still collecting physical cash from members? Well it is time to consider opening a bank account. Ensure that all members deposit their contribution directly to the bank. The must then bring proof of payment to the monthly meetings.
DODGY SERVICE PROVIDERS
John also encourages stokvels to be on the lookout for dodgy service providers. One of the common scams for non-monetary stokvels is untrustworthy service providers.
John says what happens within grocery or furniture stokvels is that the hired transport disappears with the goods.
This happens a lot around December when it is time to buy and divide the groceries. Groups end up losing all they have been saving for throughout the year.
“Use people you know and that can be traced. Preferably take someone from your own community,” says John.
Bank interest rates might be lower, but they guarantee that your investment is safe
WHAT TO DO
According to John and Busi, once the money is gone the chances of getting it back are very slim. However, it’s important to open a case with the police so they can pursue the perpetrators. If you don’t escalate the matter by reporting it, more people can fall victim of the same scammers. Be safe!