The Competition and Consumer Authority (CCA) has sounded the alarm regarding the growing participation of Batswana in pyramid and related scheme activities within the country.
Despite ongoing investigations into a pyramid scheme named Ecoplexus, CCA has noted a worrying trend of continued engagement in similar fraudulent schemes by members of the public.
โThere is continued participation in pyramid and related scheme activities in Botswana,โ the Authority said.
โWhile efforts to unravel the complexities of the Ecoplexus scheme are underway, the proliferation of schemes such as Miracle Farm, Berry, Blacpair, QZ, Coin Vault, Smart bit Copy Trading, MTFE Trading, and TBFX has raised red flags,โ the CCA said.
Investigations have revealed that millions of Pula have been siphoned from unsuspecting Batswana through the Ecoplexus scheme alone.
CCA said the classic sign of a pyramid scheme is that participants receive compensation primarily from the recruitment of other persons as participants, rather than from the sale of actual goods and services. Such schemes promise high returns in a short period of time, and the primary emphasis is on recruiting more members to earn proceeds.
โThe high returns promised cannot realistically be achieved through normal investment, and in most cases the promoter will use false or misleading conduct. The promoters often promise guaranteed returns while secretive about the actual business model, and a fee or initial investment is required to participate in the scheme,โ said CCA.
The CCA said early โinvestorsโ or participants in the scheme actually get paid the big returns, which leads them to recommend the scheme to others. โThe investorsโ are paid out of the new money flowing in, but eventually no new investors can be found, and the pyramid collapses.
โThe public is warned to desist from participating in the peddling of pyramid schemes, and in particular, any such activities that promise unrealistic quick returns on purported investments,โ CCA said.
The Consumer Protection Act of 2018 prohibits pyramid and related schemes. CCA also warned the public that participation in a pyramid scheme either through joining, promoting or inviting someone to join the scheme is an offence.
The Act states that a person who directly or indirectly promotes, or knowingly joins, enters or participates, or causes any other person to promote, join, enter or participate in a pyramid and related scheme commits an offence.
The Act provides that a person who participates in a pyramid scheme, multiplication scheme, chain letter scheme or any other arrangement, agreement or practice declared a pyramid scheme, commits an offence and shall be liable, upon conviction, to a fine not exceeding P100 000 or to imprisonment for a term not exceeding five years, or to both.
