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Pyramid Schemes 101 (and how to avoid other scams you may not know about)

Also read the following related article:

* 5 signs it’s a Ponzi scheme (and not the great investment you imagine it to be)

A pyramid scheme is an unsustainable business model that involves promising participants payment or services.

These schemes don’t create any goods or services, but function only as a way for the scheme to generate revenue by recruiting more members or soliciting more money from current members.

Eventually, recruiting is no longer possible and the plurality of members are unable to profit from the scheme.

The Money Show’s Bruce Whitfield interviewed Gerald Mwandiambira, Acting CEO of the South African Savings Institute, about the ins and outs of these pyramid schemes.

Whitfield also spoke to Rosalind Lake, Director at Norton Rose Fulbright South Africa, who says consumers can approach the Consumer Commission with regards to Ponzi (illegal under the Consumer Protection Act) and fraudulent schemes.

Scroll down to listen to the audio for more detail.

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