Ponzi schemes on the police radar
District Police Chief (Thiruvananthapuram Town) Balram Kumar Upadhyay urged the public to be cautious against Ponzi or Multi-Level Marketing (MLM) programs that end up deceiving many.
Mr Upadhyay, who ran a month-long cybercrime and financial fraud awareness program, said such pyramid structure schemes deceive those who fall into the trap of promising quick and easy money if they sign up by paying a certain amount and then adding more members. .
The programs ensure high returns and also pay the first installments to the investor as promised so that word of mouth attracts potential investors. While the commission is paid to the investor for including more people in the program rather than for selling products, the program becomes unsustainable after a while as the number of people signing up starts to drop. This prompts the fraudsters to end the scheme and run away with the money.
No sales, just returns
Mr Upadhyay advised the public to be wary of schemes that offer unusually high returns, especially without actual selling of goods or services. Accepting money as part of such schemes is a recognizable offense under the Price Token and Circulation of Money (Prohibition) Act 1978. The officer urged people to alert police if they noticed any such schemes.
He also urged caution against frauds and OTP-based schemes that offer instant and short-term loans. In the latter case, fraudsters trick borrowers and can charge significantly higher interest rates. Those interested in taking out loans should check whether the lender is registered with the government or other authorized bodies. It should also be noted that genuine loan providers never offer money without verifying the documents.