Scams and get rich quick schemes

Scams and get rich quick schemes

Many of us have financially over indulged over the festive season and now we need to get back to the reality.  Around this time,  you are probably looking at your phone with expectant eyes, waiting patiently for the magical SMS saying your salary has been credited into your account, all because you were a bit too free with your money over the festive season.  This is the perfect time for scammers to come out in full force as many of us are cash-strapped this time of year. Be reminded that scams rely on the good deal syndrome, the fact that most of us can’t resist that bargain.  Remember, scams are formulated for one purpose which is to steal your money.
Stay one step ahead of the prowling fraudsters by looking at the following warning signs of “telemarketing fraud” – what a caller may tell you over the telephone/cell phone:

  • You’ve won a free gift, vacation, or prize.  But you have to pay for postage and handling or send other charges.

  • You must act now or the offer won’t be good. 

  • You must send money, give a credit card or bank account number, or have a check picked up by courier.  You may hear this before you have had a chance to consider the offer carefully. 

  • You can’t afford to miss this high-profit, no risk offer.

If you hear these or similar lines from a telephone salesperson, just say “no thank you’ and hang up the telephone. It is very difficult to get your money back if you’ve been cheated.  Before you buy anything by telephone or otherwise, remember the following tips:
Don’t buy from an unfamiliar company.  Legitimate businesses understand that you want more information about their company and are happy to comply.

    • Always ask for and wait until you receive written material about any offer or charity.  If you get brochures about costly investments, ask someone whose financial advice you trust to review them.  But, unfortunately, beware – not everything written down is true.

    • Always check out unfamiliar companies with your local consumer protection agency (i.e. National Credit Regulator (NCR), - Financial Sector Conduct Authority  (FSCA), South African Reserve Bank (SARB)

    • Obtain the a sales person’s name, business identity, telephone number, street address and business licence number before you transact business. 

    • Some con artist gives out false names, telephone numbers, addresses and business license numbers.  Verify the accuracy of these items.

    • Always take your time making decisions.  Legitimate companies won’t pressure you to make a snap decision.

    • Don’t pay for a free prize.  If a caller tells you the payment is for taxes, he or she is violating the law.

Just like scams, “get rich quick schemes” have also been the order of the day for fraudsters in the investment environment. This is primarily because of awareness in people’s attraction to effortless high returns. The latter is what convinces beginner investors into making risky financial decisions and is fuelled by an appeal to gain wealth in a short period of time. However, some things are simply too good to be true. Typical examples of “get rich quick schemes” are ponzi and pyramid schemes.

In a ponzi/pyramid scheme, participants attempt to make money by recruiting new participants. They are often disguised as multi-level marketing programs, selling legitimate products or services. However, the promoters of the investment use money from new recruits to pay off early stage investors until eventually, the pyramid collapses. At some point, the schemes get too big and the promoter cannot raise enough money from new investors to pay earlier investors and people lose their money. Without any legitimate earnings, ponzi/pyramid schemes require a steady stream of new investors to survive.  
Tips for avoiding get rich quick schemes:

    • Be careful of any investment opportunity that makes exaggerated earnings claims;

    • Consult an authorized financial services provider before investing;

    • Be wary of opportunities to invest your money in financial services providers that require you to bring in more investors to increase your profit.


In conclusion, verify the legitimacy of the financial services provider before you invest by visiting or call the Financial Services Board toll-free call center on 0800 110 443 or 0800 202 087.  If you do suspect fraud, contact the Fraud hotline at 0860 101 248. 

This article was co-authored by Harold Strauss (Community Relations Officer) and Itumeleng Steytler (Consumer Education Officer) from the Consumer Education Department at the Financial Services Board.