Police warn of pyramid scheme threat
Bermuda’s struggling economy has given rise to a rash of ‘get-rich-quick’ schemes with unknowing participants getting duped out of hard-earned cash.The Police have issued another fraud advisory warning the public that pyramid schemes originating from here and abroad are bilking Bermudians out of money when they need it most.“The Bermuda Police Service and the Department of Consumer Affairs are aware of a number of multi-level marketing schemes currently being operated in Bermuda and advise caution to those considering participation,” a statement read.Pyramid schemes are typically advertised as having the potential to make large amounts of money within a short time period, requiring little effort from the participant. The investor is usually required to pay an introductory or training fee and occasionally a product or service may be offered as a means to legitimise the operation.In March, the Police, Consumer Affairs and the Bermuda Monetary Authority came together to launch an awareness campaign to educate the public on the dangers of these schemes.The authorities say many of the scams are originating outside of Bermuda and while there is no hard data on how many victims are out there and how much they’ve been taken for, they know the type of victim scammers are after: the old and the unemployed.Those that are less computer savvy or are hard up for quick cash are the most vulnerable say the groups.“The only way for a pyramid scheme to work for everyone is if there is an endless supply of new members and in reality there isn’t,” said Honey Adams, education officer with the Department of Consumer Affairs. “It is mathematically impossible and when the business is unable to recruit new investors the money stops coming in and the business collapses.”She added that it is illegal for residents to operate a pyramid scheme under the Consumer Protection Act 1999 and carries a $15,000 fine and/or imprisonment for up to 12 months, if found guilty.If you are aware of a pyramid scheme currently in operation, please contact the Financial Crime Unit on 295-0011 or Crime Stoppers on 800-8477.
If you are considering joining a pyramid scheme:
— Do your research — investigate the business and its products first.
— Get as much information as you can, including copies of sales literature, and their business plan.
— Make sure your commission is derived from selling the product, not attracting new recruits.
— Talk to other people who have experience with the multi-level marketing company to determine whether the products are actually being sold and whether they are making good money.
