JOHANNESBURG, March 29 (Xinhua) — The National Consumer Tribunal (NCT) has fined Up Money an administrative fine of one million rand (about 66,796 U.S. dollars) for conducting a pyramid scheme, said the Department of Trade, Industry and Competition (DTIC) on Monday.
Last year the National Consumer Council (NCC) referred Up Money to NCT after investigating it for operating a pyramid scheme.
“While Up Money promoted their scheme as a ‘stokvel’ to lure participants during the pandemic, the Tribunal confirmed that it is not a stokvel but, a pyramid scheme, as their operation fits the description of a pyramid scheme as provided under Section 43 of the CPA,” said DTIC Deputy Minister Nomalungelo Gina.
Stokvels are invitation-only clubs of twelve or more people serving as rotating credit unions or saving schemes in South Africa where members contribute fixed sums of money to a central fund on a weekly, fortnightly or monthly basis.
“Up Money’s business model was unsustainable as it relied heavily on new participants feeding into the scheme,” she said.
Gina said the fine would send a strong message to South Africans from promoting, joining or participating in any pyramid schemes.
The acting National Consumer Commissioner Thezi Mabuza warned that pyramid schemes are illegal and people risk losing their money by joining them.
“The NCC is pleading with all South Africans as responsible citizens and members of communities that they should be honest in their dealings. If people are recruited into prohibited/illegal activities, thought should be given to the relationships that may be severed, trust that may never be restored, but mostly the economic hardships that others would suffer and may not be able to recover from in this lifetime,” she said.
Mabuza said pyramid schemes are mushrooming with some using social media to lure people who continue to lose their hard-earned cash. Enditem