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WhatsApp gifting an illegal activity, says National Consumer Commission

WhatsApp gifting became an attractive option for many cash strapped citizens due to its low joining fees and promises of a quick return within days.

Picture: 123rf.com

JOHANNESBURG - The National Consumer Commission (NCCC) on Tuesday said that the popular WhatsApp gifting that many South Africans had taken to was an illegal activity.

The NCCC briefed the media on the rise in pyramid schemes during the COVID-19 national lockdown as many face retrenchments and salary cuts.

WhatsApp gifting became an attractive option for many cash strapped citizens due to its low joining fees and promises of a quick return within days.

The scheme is dependent on more people joining and those at the top benefit from the latest recruits.

The NCC’s acting company secretary, Joseph Selolo, said WhatsApp gifting was in contravention of the Consumer Protection Act.

“What we know about WhatsApp gifting is that a person joins and is assigned a lower level, and that person must then recruit and their money is used to pay the existing people who are higher up in the levels.

“And then they must recruit and, once they recruit, they move a level up. That is what is called a chain ladder in the Consumer Protection Act, it is prohibited conduct. This WhatsApp gifting is an illegal activity,” Selolo said.

Selolo said it would be difficult to investigate WhatsApp gifting.

“The challenge with WhatsApp gifting is that it happens in a closed community on people’s cell phones. Participants do not willingly lodge complaints. The only time they lodge a complaint is when they have lost their money,” he said.

He said that they were not investigating WhatsApp gifting as there had not been any complaints lodged to the NCC.

“If we do receive complaints we will indeed look into it and that is not to say we are unable to do so on our own accord,” Selolo said.

At the same time, the NCC together with the Asset Forfeiture Unit (AFU) received a preservation order to freeze bank accounts worth R18 million of the executive directors of Up Money pyramid scheme. The scheme has swindled over 230,000 vulnerable South Africans who were promised grocery packs.

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