![]() This is why there’s always the urgency and coercion to make an immediate financial commitment under the guise of missing a once-in-a-lifetime opportunity to get rich.įourthly, the scheme is not registered with or regulated by any recognised authority. Unsurprisingly, a proper check of “get-rich-quick” schemes will unmask their fraudulent nature. Legitimate investments are transparent and can provide investors with all the information they need to help them decide whether to invest. There is usually no clear answer about the nature of the scheme, what it invests in, how it generates its returns or the credentials of the organisation. This is a classic characteristic of a “get-rich-quick” scheme. Thirdly, there is urgency to join the scheme and no clarity on how the scheme works. When the scheme collapses, it is almost impossible to recover the money you’ve lost because you’ve technically given it to a stranger (remember, the definition of financial fraud encompasses the misrepresentation of identity). At worst you lose all the money you’ve invested. At best you lose out on the returns you were promised. Once the number of existing members exceeds new members, the scheme goes “belly-up”. ![]() Typically, such schemes are sustained by relying on the investments of new members to pay existing members. Secondly, new members are constantly recruited to join the scheme. An investment that promises substantial returns tends to be quite risky, which repels most people with a low appetite for risk. In other words, no investment is risk free or can guarantee significant returns. The second rule is: the higher the risk, the higher the return. Amassing a small fortune within a short space of time should raise questions about the scheme. The first is that it takes time to make money. There are two golden rules when it comes to investing. The five tell-tale signsįirstly, they offer exaggerated and above-market returns within a short period of time, with the promise of little to no risk. There are five tell-tale signs of a “get-rich-quick” scheme. ![]() Ponzi schemes have since resurfaced in different forms in South Africa, Nigeria, Zimbabwe, Kenya, Ghana and several other African countries. In the early 1990s, MMM Global - one of the world’s largest and most notorious ponzi schemes - defrauded up to 40 million people, who lost an estimated $10 billion. There have been some massive fraud schemes over the past 30 years. You should avoid them because, more often than not, they are bogus and fraudulent business ventures. ![]() They promise financial benefits that don’t exist. The people running them take money through deception: the misrepresentation of information and identity. The schemes are a form of financial fraud. They’re also sometimes called ponzi or pyramid schemes. “Get-rich-quick” schemes are one such trap. We use our academic platform to share our expertise on finance, including common financial traps people should steer clear of. Our research interests centre on financial systems in emerging economies, and we advocate for financial inclusion and empowering marginalised communities through financial literacy and financial planning. Nothing beats the prospect of making easy money, and every now and again there seems to be a “get-rich-quick” scheme circulating on WhatsApp or on social media that seems legitimate. It’s during such times of economic difficulty and uncertainty that fraudsters lure unsuspecting consumers into “ get-rich-quick” schemes, offering an avenue to make easy money by investing in a “lucrative” financial opportunity. On top of that, salaries aren’t keeping up with inflation, making it more difficult to save and build wealth. With food and fuel prices rising, it’s becoming increasingly difficult to keep financially afloat. The World Economic Forum reports that the cost-of-living crisis is affecting people across the globe. Consumers are under a lot of financial strain. ![]()
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