Beware of get-rich-quick-schemes

Cape Town - As desperation levels rise, South Africa's job-seeking army is increasingly looking for alternative ways to make money - and fast.

And get-rich-quick-schemes can lure even the most sceptical to buy into them.

Currently under investigation by the National Consumer Commission (NCC) as a potential pyramid scheme, MMM South Africa calls itself "a community of ordinary people, selflessly helping each other" on its colourful website. But even more interesting: "The goal here is not the money. The goal is to destroy the world's unjust financial system."

It is worth noting that under the entry MMM (Ponzi scheme company), Wikipedia speaks of "a Russian company that perpetrated one of the world's largest Ponzi schemes of all time, in the 1990s. By different estimates from 5 to 40 million people lost up to $10bn. The exact figures are not known even to the founders".

One of MMM's original three founders, Sergey Mavrodi, posted a video on MMM South Africa's Facebook page on September 13 in which he says "everything is wonderful, excellent and great in South Africa". Speaking in Russian with English subtitles and looking casual and relaxed, Mavrodi defends his system.

"... where else is it possible to receive 30% per month?.... the concept and ideology of the System is completely good, kind and pure." He urges converts to get more people to join, waving the carrot of bonuses.

His concluding words are: "As well, I believe that the financial apocalypse is inevitable. Together we change the world!"

WorldVentures, a US travel network which is also being probed by the NCC, calls itself a "very powerful new concept that's taken the world by storm" in a glossy presentation video by Sashin Govender. The company's mission is "to spread more fun, freedom and fulfilment around the world", according to Govender, the scheme's international marketing director.

He goes on to say that WorldVentures' Dreamtrips VIP travel club has won what he calls "13 world travel awards known as the Oscars of the tourism industry, including the world's leading online travel agency".

It costs R4 200 to become a gold member with a monthly fee of R1 200; platinum membership costs R6 200 with a R1 200 monthly fee.

Those who invest in dubious schemes seem to have an unshakeable capacity for self-deception. A recurring theme in their ranks is that other people are "jealous" of their money-making prowess, and that regulators are spoilsports out to prevent struggling consumers from raking in much-needed extra cash.

READ: Mailbox: Hands off our schemes, say users

Under the header "Media scare alert and propaganda" and in response to the NCC investigation, Bongumusa Popzin Khumalo has posted a reassuring message on MMM South Africa's Facebook page.

"MMM and KIPI (another scheme under investigation by the NCC) has proven to be the best financial sectors so far and surpass even the banking system," says Khumalo. "MMM and KIPI are at least changing peoples lives and the government on the other hand is creating poverty stricken communities left right and center."

Says Khumalo: "We want to send a clear message to FSB (Financial Services Board)...NCC...Reserve Bank and the media that we are not stupid and we are exercising our democratic rights to choose how, were (sic) and whom we give our money to.... We want to send a stern warning to all this so called regulators that we are watching them in slow motion and soon we will go to the street and make our wrath be felt."

The FSB in May already alerted the public that it had received numerous queries relating to the registration of a company called KIPI (Mydeposit247), and expressed concern over the Wealth Hub scheme, another one of the nine schemes being probed by the NCC. It pointed out that neither of these businesses were registered as financial services providers.

READ: FSB warns on fake financial schemes

The NCC has confirmed to Fin24 that it is conducting a preliminary investigation into nine suspected pyramid schemes including MMM South Africa, WorldVentures and KIPI, to establish if they are contravening the provisions of the Consumer Protection Act and its regulations. 

WorldVentures sent the following response to Fin24's request for comment: "Please be advised WorldVentures is a Legitimate company, although we have several reviews out there we can not refuse the opinion of others. If you would like to learn more about the company and how it works you may contact our South Africa Support at +27105008583 for assistance Monday-Friday from 8 a.m. – 6 p.m."

MMM South Africa has not responded to requests for comment.

ALSO READ: Mailbox: Resisting too-good-to-be-true offers

* Are you an investor in one of these schemes? Let us know and you could be published.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot