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During desperate times a large number of “get rich quick” schemes do the rounds, especially over social media. Often, “get rich quick” schemes offer unrealistic returns (often in excess of 50% or more) in a very short period of time and all that is required is that an amount be paid.
With the introduction of the Consumer Protection Act certain “get rich quick” schemes were made unlawful, which include: pyramid schemes; multiplication schemes; and, chain letter schemes.
Briefly, a pyramid scheme is a system or a business which offers to pay or reward a member for primarily recruiting new members instead of selling products or services. Often, pyramid schemes attempt to conceal their true nature by referring to the scheme as a multi-level-marketing (or a network marketing) business.
Bear in mind that not all multi-level-marketing (or a network marketing) businesses are pyramid schemes, in fact the majority of such businesses are perfectly legal and do offer their members the opportunity to make money.
A typical pyramid scheme may have the one or more of the following telltale signs:
In short, a Multiplication Scheme is a system (or a business) which promises returns above a particular rate 20% above the repo rate. Currently, the repo rate is 4.25% and as such any business which offers a return of more than 24.25% should be avoided.
These schemes are unlawful for good reason, often these schemes are merely scams and the only business being conducted is the business of stealing your hard earned money.
A multiplication scheme may have one or more of the following traits:
Owing to the popularity of bitcoin, there have been a number of bitcoin multiplication schemes claiming to be able to double your bitcoin using a secret method (often they claim to know of a computer exploit, or hack, which would increase your bitcoin.
A chain letter scheme is a system in which you are required to: make payments to existing members; and, send the letter to a number of people who might be interested in making money.
In practice, you would receive a letter (or an email / Whatsapp) message inviting you to join the money making scheme and all you have to do is pay some money to the persons mention in the letter and then send the letter to a number of people.
A typical chain letter scheme should have one or more of the following characteristics: