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Pyramid scheme participants will not be compensated, says consumer commission

The Consumer Protection Act is clear, nobody can directly or indirectly promote or knowingly join, enter or participate in a pyramid scheme.

A pyramid scheme. Picture: Pixabay.com

JOHANNESBURG - The National Consumer Commission (NCC) on Tuesday said while victims of pyramid schemes would be compensated once the money from the scammers was recovered, willing participants would receive nothing.

The commission has cautioned South Africans against "get rich quick schemes" after the Assets Forfeiture Unit received a preservation order to freeze bank accounts worth R18 million belonging to the executive directors of the Upmoney Pyramid Scheme.

The scheme has swindled over 230,000 vulnerable South Africans out of their money they had been promised grocery packs if they joined with R180 and recruited five others.

The Consumer Protection Act is clear, nobody can directly or indirectly promote or knowingly join, enter or participate in a pyramid scheme.

Once a scheme has been declared a pyramid scheme and the money invested by participants is recouped, victims are then compensated by the National Consumer Commission.

But the National Prosecuting Authority’s Ouma Rabaji-Rasethaba said there was a difference between a victim and a willing participant.

“Or if there are no victims, the money is sent or deposited into what is called a criminal asset recovery account.”

She said those who were found to be promoting these schemes may also be fined by the consumer commission.

The NPA said the men behind the Upmoney Scheme, Jade Matsemela and Sipho Mdlhuli are being investigated.

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