Is the new ‘WhatsApp Stokvel Group’ a scam?
Scores of people have taken to social media to complain about the new ‘Whatsapp Stokvel Group’, claiming to have not received the money they were promised.
A new 'WhatsApp Stokvel Group' has taken South Africa by storm. The joining fee for the stokvel is R200, and those who join are promised to receive instant interest on the money. According to some users on Facebook, you deposit R200 and get R1,000 deposited back into your account.
Sadly, just like many pyramid schemes, only the first few that join get paid out, and the majority who follow suffer a loss.
We spoke to Financial Advisor Clive Eggers, the Head of Investments at GTC, about how one can identify a pyramid scheme.
“There is no one golden rule to identify whether something is a scam or not,” says Clive.
“One of the rules of thumb - and it sounds like common sense, but it is true, is if something seems too good to be true, it probably is. In other words, if the return that is being promised, normally that investment return, and these things, are unusually high, way above what you see from other service providers, that is normally a very clear indication that something is wrong,” warns Clive.
Ways to identify a pyramid scheme
To find out if something is not a pyramid scheme, Clive says the public should do the following:
- Find out whether the “investment opportunity is registered with the relevant authority” such as the Financial Services Conduct Authority (FSCA). Clive says if it is a pyramid scheme, it won’t be registered with the FSCA.
- Another way to check if the investment is legit is by looking for the company’s licence number, or FSP number or ask for their registration number.
- Clive says you must also do thorough research on the internet and look at what people have written about the company or investment, but he warns that one should look beyond the first page results on the web.
READ: Scam Tenders - a cautionary tale
Desperation from people
According to Clive, many people end up falling victim to scams because of desperation to make money.
“I think there is some self-reflecting that people need to do,” says Clive.
He says people should ask themselves: “Am I making this decision because I am desperate, so have I done proper research?" You can’t just rely on someone telling you this is a great thing. You must do your own investigating.
Clive advises that people talk to their financial advisors to help them with financial decisions.
READ: Listeners share stories of being scammed
Main image credit: Facebook screenshot/ @ Chrishenda Thomas