Sunday, February 05, 2012

BVI FSC Published Advisory Warning on Pyramid Scheme Frauds

In January, a special Advisory Warning was published by the British Virgin Islands Financial Services Commission, which became the first document of this kind in the year 2012, urging investors to beware of Pyramid Scheme Frauds and other investment scams.

In this press release, a pyramid scheme is defined as a fraudulent money-making scheme based on a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without delivering a legitimate product or service. The published document contains also the signs of a pyramid structure becoming a pyramid scheme – for example, if joining the group allows the new member to profit by signing up new members, it is normally scam. There are also other ways to identify pyramid schemes.

The BVI FSC warns that if these companies do not disclose information on the risks involved or tell clients otherwise then they would be involved in illegal schemes. Also, legitimate trading schemes rely on valuable goods and services, while illegal pyramid schemes focus simply on recruiting investors.

On the British Virgin Islands website, there is additional information on pyramid schemes, how to evaluate potential opportunities to avoid becoming a victim of fraud, and some tips on what you can do if you have become a victim of pyramid scheme fraud.

No comments: