Ponzi schemes on the rise during economic downturn
Crowd1, a Spanish firm that claims to use multi-level marketing to sell packages and shares to investors, has since grabbed the attention through numerous complaints received by the National Consumer Commission and the Financial Sector Conduct Authority.
The company which was founded by Swedish businessperson Jonas Eric Werner in 2019 and owned by Impact Crowd Technology, was introduced to South Africans last year.
It sells educational packs and shares in casinos across the world.
Crowd1 has been banned and cautioned by several countries including Namibia, Burundi, Paraguay, the Philippines and New Zealand.
Imtiaz Ebrahim, Secretariat of the Direct Selling Association of South Africa has cautioned that if something sounds too good to be true then in most cases people should take it as a red flag.
The first red flag is, if it's too easy or it sounds too good or sounds like one is going to be making a lot of money, one needs to be careful.Imtiaz Ebrahim, Secretariat of the Direct Selling Association of South Africa
Ebrahim says a person needs to ensure an international company has a registered entity in South Africa if not, it would be hard to claim from that specific company as they are not in your vicinity.
If a company is registered outside the country they need to be worried because if something goes wrong or a company owes you money, you should have recourse. It's hard to claim from a company that is not registered in South Africa.Imtiaz Ebrahim, Secretariat of the Direct Selling Association of South Africa
The Reserve Bank has mentioned that it has never issued a license to the project for any financial product, financial service or market infrastructure cautioning consumers against investing with unregulated entities.
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