FTC considers new legislation to deal with pyramid schemes

With an increasing number of Barbadians reportedly losing thousands of dollars in so-called blessings circles over the last few months, the Fair Trading Commission (FTC) will be re-examining its legislation regarding pyramid schemes to address this issue.

Speaking during a discussion on Scams and Schemes hosted Monday by the Barbados Association of Retired Persons (BARP), the FTC’s Director of Consumer Protection, Dava Leslie-Ward, said special legislation will be required to deal with what she described as these “unfair” arrangements.

“The existing legislation speaks specifically to what we call multi-level marketing schemes – that is, where people are recruited to sell products and services but it becomes more about recruiting people to sell the products than actually selling the products themselves. We consider these unfair because in order for anyone to make any substantial returns on their investment, they have to recruit an unrealistic number of people,” she said.

“These blessings circles we have been hearing about recently – and, indeed, late last year we were getting at least five people a day calling us who had lost money in these schemes – require a different legislative framework since it does not involve the sale of goods and services, but just the recruitment of people into a scheme.”

Leslie-Ward noted that older people were vulnerable to these schemes since they were operating on reduced incomes and therefore had to be extra careful how they invested it.

She advised them: “If you have to give up money for anything, make sure you get a receipt stating clearly the name of the person you paid and outlining what you paid for. You should also ask the person who writes the receipt to show you their identification card. If they refuse to give you a receipt or show their ID card, that is an immediate red flag.

“It is also advisable that you get an investment contract – a document stating how much you can invest, potential returns on said investment, where the money you invest is really going, and what measures are in place to compensate would-be investors if the whole thing collapses.”

Leslie-Ward said the FTC will be holding a ‘Scam Week’, during which it will embark on a public education campaign via its social media pages, as well as on radio and television, highlighting this matter. (DH)