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By Alicia Pillai
With the petrol price climbing to R17 a litre and news of further increases, consumers are feeling the pinch and are looking for ways to make their money grow, and make it grow fast. The financial pressure also creates opportunities for scam artists who make promises of turning your money into millions.
Desperation to make more money could cost you more than you know and all consumers, are at risk. The Financial Sector Conduct Authority (FSCA) is seeing an increase in complaints especially against online trading platforms. This can be seen from the recent media releases and warnings issued by the FSCA, namely; Xchange Share Tracking, Trading (Pty) Ltd & DSB Brokers/DBS Securities Ltd, Bull N Bear Investments (Pty) Ltd, Financial Broking Circle CC, Khasoane IMarkets Trading (Pty) Ltd and Lisema David Khasoane to mention a few.
So how do these scams operate? Behind the fancy logo, impressive website and portfolios printed in full colour and on high gloss paper, many of these companies disguise themselves as legitimate companies.
Below are a few examples of recent scams as reported on by consumers to the FSCA;
Entity 1:This entity runs seminars in various provinces promoting its business which is alleged to be trading forex on behalf of client. The company makes promises of huge returns on investments. Clients are made to sign investment mandates which varies in periods of investments, for example the investment period can be 3, 6, 9 or even 12 months. In this case however, the investment period (often, incorrectly, called a 'lease period') was three months and at maturity clients were persuaded to roll-over their investments to the next period. There is no actual trading. Old investors are being paid out, new investors money!
This company offered an online trading platform on which it claimed to be trading on behalf of its clients, but in fact there was no actual trading. The so-called "platform" was a front manipulated by the owner to reflect trading results. Initially a client will invest a small amount and fake reports on trading activities would reflect good returns, sometimes reporting a doubling in the initial amount invested. Clients would then be informed that if they had invested more money, they would have made a better return on their investment. As a result, clients borrowed money and got loans from the bank to increase their investment amount. Hereafter, the "investments trading" would be so bad that clients lose all their money.
Questions to ask yourself;
Report scams anonymously to Whistle-blower's Email: Admin@whistleblowing.co.za or firstname.lastname@example.org Toll-free: 0800 31 36 26Fax: 086 522 2722