Beware of pyramid scams

Christmas is coming, the goose is getting fat.
Please put a penny in the old man’s hat.
If you haven’t got a penny a ha’penny will do.
If you haven’t got a ha’penny then God bless you!

The message contained in the old nursery rhyme is that Christmas is a time for charity. It could be argued that the same applies to any time of year. The pressures exerted on us all by commerce at this time of year however often leads people to spend money they cannot afford. It may often seem like a good idea to buy something on impulse and worry about how to pay for it later. While the old man in the nursery rhyme may or may not be in debt those of us who spend beyond our means will be.

If you do find yourself in debt come to your local Citizens Advice Bureau for advice on how to make sure your gas and electricity are not cut off or that your possessions are not taken by bailiffs.. This is a much better solution than taking out expensive loans or spending money on get rich quick schemes which turn out to be scams – and there are plenty of unscrupulous people running them who can’t wait to take your money. Take pyramid selling for example. The basic principle is simple and apparently fool proof. You have to pay a fee to join, say £1,000. You persuade six people each paying £1,000 to join, the company keeps a nominal amount, say £500 and you get £5,500 return on your initial investment, a profit of £4,500.

The difficulty is in the number of people needed to make a scheme like this work. To work once it only needs six people. The second round requires thirty-six members. However for the tenth round over 60 million people are required to take part which is more than the entire population of the United Kingdom. The thirteenth round requires more people than the population of the planet. Beware. Pyramid schemes come in many different disguises and may involve selling something, like chain gift schemes for example.

You go to a presentation and are offered an expensive gift if you buy a low value gift. To get your expensive gift you have to recruit new members to the scheme. You are unlikely to get the gift. s The basic point to remember is that if you are asked to invest money in anything which involves making a profit based on recruiting customers or other investors it is likely to be a scam. This applies however worthy the product might appear to be. All pyramid selling is illegal in the UK and many other countries.

You can report scams like a pyramid selling on the Action Fraud website. Go to:

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