A Pyramid Scheme is a fraudulent money making venture and avoid joining and participating in any suspicious financial scheme.
This is the warning from the Registrar of Financial Institutions at the Reserve Bank of Malawi (RBM) after unknown number of citizens have been swindled of their cash through this scheme.
The Registrar narrated in a statement titled ‘Understanding And Protecting Yourself From Fraudulent Financial Schemes: ‘Pyramid Schemes’ that the scheme “is a non-sustainable model that promises members of the scheme money in the form of grants, loans or other financial rewards primarily for enrolling other people into the scheme.”
The Registrar said in most cases, requirements for joining a fraudulent scheme “are in monetary terms in the form of registration, entry fees, membership fees, training fees or subscription fees which are usually at a rate as high as K300,000 per member.”
The statement further warned that pyramid schemes’ promoters and administrators use respected and prominent people in society, including community or religious leaders, “to legitimise and convince people to join the Scheme.”
But the Registrar urged citizens to note that concept and operations of pyramid schemes were different from the concept if village banks or rotational savings and credit associations.
The Registrar advised the general public to be “sceptical of informal financial groups that require you to bring subsequent members/ investors to increase your initial investment or to increase your chances of getting a loan or grant.”
OTHER DO’S & DONT’S:
. Each financial consumer or investor should assess the legitimacy of any financial group and underlying investment before joining.
. Enlist cooperation from the public, particularly with regard to reporting of suspicious financial activities or schemes, to enable appropriate investigationd and actions by relevant authorities.
.Report to Malawi Police Service for appropriate action if you are suspicious that a certain grouping or organisation might be operating a fraudulent financial scheme.
. Avoid joining and participating in any suspicious financial scheme.
. Endeavour to always deal with licensed and regulated financial institutions.
.Where one is not sure about the credibility of the financial institution or financial group that you are dealing with, seek advice from the Registrar at RBM in Blantyre
Credit; MBC Malawi