The Competition and Consumer Affairs Commission (CCAC) today advised members of the public to be wary of Pyramid and Ponzi schemes which are disguised as legitimate investments.
The CCAC in a statement said that the warning is being issued in the wake of several enquiries made to the Commission about the investment “scams”. The Commission said it has also been told of approaches made to persons with the “get rich quick” schemes through investing in these groups that will earn them multiple times their investment. Part of the scheme is for them to also participate in continuous recruitment of persons to join this pyramid scheme.
Consumers need to note that, “essentially, the foundation on which the pyramid scheme is built is the problem. Any plan that offers commissions for recruiting new members will inevitably collapse. The real casualties in the collapse are always the people in the bottom, with the people at the top of the pyramid protected”, the CCAC said.
The statement noted that Part V of the Guyana Consumer Affairs Act, No. 13 of 2011 speaks to the issue of “Pyramid selling” as it clearly states: a person shall not promote or operate a pyramid selling scheme and any person who contravenes the subsection of this Act commits an offence.<
The Act states that the term “pyramid selling scheme means a scheme that (a) provides for the supply of goods or services or both for reward; (b) that, to many participants, constitutes primarily an opportunity to sell an investment opportunity rather than an opportunity to supply goods or services: and (c) that is unfair, or is likely to be unfair, to many of the participants in that – (1) the financial rewards of many of the participants are dependent on the recruitment of additional participants; and (11) the number of additional participants that must be recruited to produce reasonable rewards to participants is either not attainable, or is not likely to be attained, by many of the participants”.