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Be wary of illegal pyramid schemes

Be wary of illegal pyramid schemes

  • 11 Apr 2021
GETTY MONEY 101120 1121

The Commerce Commission is advising people to be wary of alleged illegal pyramid schemes currently operating in South Auckland. 

A spokesperson for the Commerce Commission says the organisation, which enforces competition, fair trading and consumer credit contracts laws, has several open investigations currently. 

“We are investigating Lion’s Share and its promoter Shelly Cullen and have sent a Stop Now letter, asking Ms Cullen to cease promoting Lion’s Share or any other pyramid scheme,” the spokesperson says. 

“We have other open investigations and are looking closely at other suspected pyramid schemes, some of which appear to be targeting the Tongan community.” 

The Commission is aware of who is being targeted because of its investigations and analysis of complaint data received from the public. 

According to the Commission spokesperson complaints about pyramid schemes have markedly increased during 2021. 

“Complaint information can be incomplete but Pacific communities are the most commonly mentioned group to be affected by pyramid schemes.” 

If a scheme requires recruitment it is likely to be an illegal pyramid scheme and should be avoided. 

Pyramid schemes can take many forms, however they have the following essential elements: getting a profit requires participant to recruit other people to pay into the scheme; and profit depends on continued recruitment of new members, not sales of a product or service. 

The Commission Spokesperson adds pyramid schemes always collapse at some point, and only the few initial participants at the top of the pyramid are likely to make money, since the number of possible new recruits in any community is limited. 

People should not contribute to a pyramid scheme and they should stop contributing if they have already started. 

They should also report it immediately to the Commerce Commission, and they should alert friends and family and community leaders about their concerns. 

The Commission is currently developing resources intended to increase awareness of illegal pyramid schemes and prevent harm from them. 

“We are planning an awareness campaign and we have provided information and interviews in numerous recent media articles including on 1News and on TVNZ Tagata Pasifika (27 March episode),” the Spokesperson says. 

“We have also published a fact sheet about pyramid schemes to help individuals and businesses recognise a pyramid scheme and comply with the Fair Trading Act 1986.”