Learn more about Ponzi and Pyramid Schemes

Learn more about Ponzi and Pyramid Schemes

Don’t say bye-bye to your money.

Every day people put their cash into get-rich-quick schemes that convince them that they can’t lose. The bad news is, they end up losing their life savings due to Ponzi and Pyramid Schemes. If the investment opportunity sounds too good to be true, don’t invest!


What is a Ponzi scheme?

Crooks disguised as good sales people will ask you to give them money that they say will be put in a scheme or a business. The scheme operator promises to give you back much more than you have given them originally, in a very short space of time. This scheme works on the premise of robbing Peter to pay Paul.


What is a Pyramid scheme?

Pyramid scheme crooks will offer you the chance to make quick money. How? All you have to do is bring or recommend other people into the scheme. The catch is that only a few people make money and you risk losing your hard-earned money.


Tips for Avoiding Ponzi and Pyramid Schemes:

Be extra careful when choosing moneymaking opportunities and the people who you give your money to. Do your homework.

Beware of ‘’opportunities’’ that claim to make you rich overnight.

The criminals behind these crimes don’t have a “criminal look” on their faces or look scary. In fact they are friendly kind, and can befriend you very easily.

Consult an independent licensed financial provider. Verify that your financial services provider is authorized  by visiting www.fsb.co.za/Fais/Search_FSP.htm  or call the Financial Services Boards’ toll-free call centre on 0800 110 443 or 0800 202 087


What to look out for:

An offer of 50-100 percent in a few months – remember, banks offer a return of about 4-5 percent over a year, so if you’re being offered more, beware.


Why is it safer to hand my money to a bank?

Registered banks and authorized investment companies are  regulated and supervised. If a person or a company is not authorized and they take your money or sell you a financial product they are acting illegally and you are putting your money at great risk.


How many of these schemes are out there?

The South African Reserve Bank investigated 15 illegal deposit-taking schemes like this in 2011 alone. Every day crooks think of clever new ways to get innocent victims to hand over their hard-earned money.


How to protect your money:

Only you can protect your money effectively. Make sure you never give your money to any company or person that is not registered as a deposit-taking institution in terms of the Banks Act – take responsibility and if in doubt, walk away.


How can I tell if it’s a get-rich-quick scheme?

A promise of becoming rich within a year or even months. Maybe even overnight.

A '’secret formula'’ for success that no one else knows about.


Remember the golden rule: If it sounds too good to be true, it probably is!

The South Africa Reserve bank is here to help protect you from being victimized.

For more information: 

Call FSB Fraud and Ethics Hotline: 0800 313 626

Email: fsb@tip-offs.com or visit www.resbank.co.za