{"id":68246,"date":"2023-05-21T18:47:54","date_gmt":"2023-05-21T22:47:54","guid":{"rendered":"https:\/\/world.edu\/?p=68246"},"modified":"2023-05-22T01:02:43","modified_gmt":"2023-05-22T05:02:43","slug":"get-rich-quick-schemes-pyramids-and-ponzis-five-signs-youre-being-scammed","status":"publish","type":"post","link":"https:\/\/world.edu\/get-rich-quick-schemes-pyramids-and-ponzis-five-signs-youre-being-scammed\/","title":{"rendered":"Get-rich-quick schemes, pyramids and ponzis: five signs you\u2019re being scammed"},"content":{"rendered":"<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter size-full wp-image-68247\" src=\"https:\/\/world.edu\/wp-content\/uploads\/2023\/05\/dont-get-scammed.jpg\" alt=\"\" width=\"680\" height=\"558\" srcset=\"https:\/\/world.edu\/wp-content\/uploads\/2023\/05\/dont-get-scammed.jpg 680w, https:\/\/world.edu\/wp-content\/uploads\/2023\/05\/dont-get-scammed-250x205.jpg 250w\" sizes=\"(max-width: 680px) 100vw, 680px\" \/><\/p>\n<p>Consumers are under a lot of financial strain. The\u00a0<a href=\"https:\/\/www.weforum.org\/agenda\/2022\/09\/cost-of-living-crisis-global-impact\/\">World Economic Forum<\/a>\u00a0reports that the cost-of-living crisis is affecting people across the globe. With food and fuel prices rising, it\u2019s becoming increasingly difficult to keep financially afloat. On top of that, salaries\u00a0<a href=\"https:\/\/www.wsj.com\/articles\/workers-pay-globally-hasnt-kept-up-with-inflation-e6df92d\">aren\u2019t keeping up with inflation<\/a>, making it more difficult to save and build wealth.<\/p>\n<p>It\u2019s during such times of economic difficulty and uncertainty that fraudsters lure unsuspecting consumers into \u201c<a href=\"https:\/\/www.sabric.co.za\/\">get-rich-quick<\/a>\u201d schemes, offering\u00a0<a href=\"https:\/\/www.sabric.co.za\/stay-safe\/ponzi-pyramid-schemes\/\">an avenue to make easy money<\/a>\u00a0by investing in a \u201clucrative\u201d financial opportunity.<\/p>\n<p>Nothing beats the prospect of making easy money, and every now and again there seems to be a \u201cget-rich-quick\u201d scheme circulating on WhatsApp or on social media that seems legitimate. But it\u2019s not.<\/p>\n<p>Our research interests centre on financial systems in emerging economies, and we advocate for financial inclusion and empowering marginalised communities through financial literacy and financial planning. We use our academic platform to share our expertise on finance, including common financial traps people should steer clear of.<\/p>\n<p>\u201cGet-rich-quick\u201d schemes are one such trap. They\u2019re also sometimes called ponzi or pyramid schemes. The schemes are a form of\u00a0<a href=\"https:\/\/www.lawinsider.com\/dictionary\/financial-fraud\">financial fraud<\/a>. The people running them take money through deception: the misrepresentation of information and identity. They promise financial benefits that don\u2019t exist.<\/p>\n<p>You should avoid them because, more often than not, they are bogus and fraudulent business ventures.<\/p>\n<p>There have been some massive fraud schemes over the past 30 years. In the early 1990s,\u00a0<a href=\"https:\/\/www.independent.co.uk\/news\/world\/africa\/mmm-global-russian-ponzi-scheme-from-1990s-reborn-and-now-spreading-like-wildfire-in-africa-a7333366.html\">MMM Global<\/a>\u00a0&#8211; one of the world\u2019s largest and most notorious ponzi schemes &#8211; defrauded up to 40 million people, who lost an estimated $10 billion. Ponzi schemes have since resurfaced in different forms in\u00a0<a href=\"https:\/\/www.iol.co.za\/weekend-argus\/news\/ponzi-scheme-investigated-as-some-victims-lost-as-much-as-r200-000-c3c3633c-2abb-4dd4-b668-a5ea608deb41\">South Africa<\/a>,\u00a0<a href=\"https:\/\/guardian.ng\/business-services\/nigerians-lose-over-n911b-to-ponzi-schemes-related-fraud-in-23-years\/\">Nigeria<\/a>,\u00a0<a href=\"https:\/\/www.voazimbabwe.com\/a\/zimbabwe-money-pyramids-ponzi-schemes\/6305100.html\">Zimbabwe<\/a>,\u00a0<a href=\"https:\/\/allafrica.com\/stories\/202105170964.html\">Kenya<\/a>,\u00a0<a href=\"https:\/\/doi.org\/10.1108\/JFC-09-2020-0177\">Ghana<\/a>\u00a0and several other African countries.<\/p>\n<p>There are five tell-tale signs of a \u201cget-rich-quick\u201d scheme. Watch out for them.<\/p>\n<h3><strong>The five tell-tale signs<\/strong><\/h3>\n<p><strong>Firstly<\/strong>, they offer exaggerated and above-market returns within a short period of time, with the promise of little to no risk.<\/p>\n<p>There are two golden rules when it comes to investing. The first is that it takes time to make money. Amassing a small fortune within a short space of time should raise questions about the scheme.<\/p>\n<p>The second rule is: the higher the risk, the higher the return. In other words, no investment is risk free or can guarantee significant returns. There is always some risk involved. An investment that promises substantial returns tends to be quite risky, which repels most people with a low appetite for risk.<\/p>\n<p><strong>Secondly<\/strong>, new members are constantly recruited to join the scheme.<\/p>\n<p>Typically, such schemes are sustained by relying on the investments of new members to pay existing members. Once the number of existing members exceeds new members, the scheme goes \u201cbelly-up\u201d. At best you lose out on the returns you were promised. At worst you lose all the money you\u2019ve invested.<\/p>\n<p>When the scheme collapses, it is almost impossible to recover the money you\u2019ve lost because you\u2019ve technically given it to a stranger (remember, the definition of financial fraud encompasses the misrepresentation of identity).<\/p>\n<p><strong>Thirdly<\/strong>, there is urgency to join the scheme and no clarity on how the scheme works.<\/p>\n<p>This is a classic characteristic of a \u201cget-rich-quick\u201d scheme. There is usually no clear answer about the nature of the scheme, what it invests in, how it generates its returns or the credentials of the organisation.<\/p>\n<p>Legitimate investments are transparent and can provide investors with all the information they need to help them decide whether to invest. Unsurprisingly, a proper check of \u201cget-rich-quick\u201d schemes will unmask their fraudulent nature. This is why there\u2019s always the urgency and coercion to make an immediate financial commitment under the guise of missing a once-in-a-lifetime opportunity to get rich.<\/p>\n<p><strong>Fourthly<\/strong>, the scheme is not registered with or regulated by any recognised authority.<\/p>\n<p>Regulatory authorities are important because they monitor the conduct of financial service providers and protect consumers by keeping their best interests in mind. The protection provided by financial regulators also instils confidence in financial systems.<\/p>\n<p>\u201cGet-rich-quick\u201d schemes are not registered and operate outside the framework of regulatory bodies. This makes investors more vulnerable to loss and makes it more difficult to seek legal recourse when the loss occurs.<\/p>\n<p>Legitimate investments in South Africa are offered by authorised financial service providers and regulated by the\u00a0<a href=\"https:\/\/www.fsca.co.za\/Pages\/Default.aspx\">Financial Sector Conduct Authority<\/a>. You can search for any authorised financial service provider on the authority\u2019s\u00a0<a href=\"https:\/\/www.fsca.co.za\/Fais\/Search_FSP.htm\">website<\/a>.<\/p>\n<p><strong>Fifthly<\/strong>, they use the testimonies from existing members who\u2019ve earned big bucks to promote the scheme.<\/p>\n<p>At the initial stages, the scheme tends to pay out to those who have invested early, and these members are encouraged to share the news of their wealth (which travels fast and far) to promote the scheme.<\/p>\n<p>But this is a tactic used to create the impression that you too can earn returns in the double digits. These schemes are both unsustainable and unethical as one person gets wealthy through someone else being deceived.<\/p>\n<h3><strong>Too good to be true<\/strong><\/h3>\n<p>It\u2019s worth repeating that if it sounds too good to be true, then it probably is.<\/p>\n<p>Wealth comes from a sound investment strategy and decisions made over time. Any promise to \u201cget rich quick\u201d should be treated with the cynicism it deserves. It will ultimately reveal its fraudulent nature. Recognising the signs of \u201cget-rich-quick\u201d schemes can save you from unnecessary financial distress.<\/p>\n<p>It\u2019s always a good idea to do your own investigation before committing your finances into any investment. You can find more information on the various types of scams through the\u00a0<a href=\"https:\/\/www.sabric.co.za\/\">South African Banking Risk Information Centre<\/a>\u2019s website and report them to the\u00a0<a href=\"https:\/\/www.safps.org.za\/Home\/Contact\">South African Fraud Prevention Service<\/a>.<\/p>\n<p><em><strong>Author Bios:<\/strong> Bomikazi Zeka is Assistant Professor in Finance and Financial Planning at the University of Canberra and Abdul Latif Alhassan is Associate Professor in Development Finance &#038; Insurance at the University of Cape Town<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consumers are under a lot of financial strain. The\u00a0World Economic Forum\u00a0reports that the cost-of-living crisis is affecting people across the globe. With food and fuel prices rising, it\u2019s becoming increasingly difficult to keep financially afloat. On top of that, salaries\u00a0aren\u2019t keeping up with inflation, making it more difficult to save and build wealth. It\u2019s during [&hellip;]\n&hellip; <a href=\"https:\/\/world.edu\/get-rich-quick-schemes-pyramids-and-ponzis-five-signs-youre-being-scammed\/\" class=\"more\">learn more&rarr;<\/a><\/p>","protected":false},"author":33,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[434440],"coauthors":[11733],"class_list":["post-68246","post","type-post","status-publish","format-standard","hentry","category-business-politics","tag-being-scammed"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Get-rich-quick schemes, pyramids and ponzis: five signs you\u2019re being scammed - World leading higher education information and services<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/world.edu\/get-rich-quick-schemes-pyramids-and-ponzis-five-signs-youre-being-scammed\/\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:locale\" content=\"en_US\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:type\" content=\"article\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:title\" content=\"Get-rich-quick schemes, pyramids and ponzis: five signs you\u2019re being scammed - World leading higher education information and services\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:description\" content=\"Consumers are under a lot of financial strain. The\u00a0World Economic Forum\u00a0reports that the cost-of-living crisis is affecting people across the globe. With food and fuel prices rising, it\u2019s becoming increasingly difficult to keep financially afloat. On top of that, salaries\u00a0aren\u2019t keeping up with inflation, making it more difficult to save and build wealth. 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