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Money circle – Avoid illegal pyramid schemes, warns FTC officials

Article by Emmanuel Joseph – Barbados Today October 20, 2021

New laws are coming to give consumer protection authorities the teeth to prosecute owners or promoters of pyramid-type schemes who are suspected of defrauding “investors” out of their hard-earned money.

Director of Consumer Protection at the Fair Trading Commission (FTC) Dava Leslie Ward said on Tuesday that the existing legislation does not allow her department to make offenders pay because of a loophole in the Consumer Protection Act as it relates to such schemes.

Speaking against the backdrop of a failed local “blessing circle” in which people have been requesting thousands of dollars in refunds, Leslie Ward said she hopes her department would be able to have proposed amendments to the Act in place soon.

“If you look at how our pyramid scheme is constructed…what the legislation would have been looking for at that time [when enacted] was where persons might have a good or service that they are offering; and in addition to the good and service, you have to be recruiting persons in order to make money. So you needed to have both elements there. That is under our legislation,” the consumer protection official told Barbados TODAY.

“In order for an offence to be constituted, you had to have both. Based on what we have now, it would not qualify as a pyramid scheme under the Consumer Protection Act, because these people are not selling any additional goods or services; and our legislation says you must have the goods and service and the recruitment element,” she explained.

“What we would have to do is to really break down the legislation and make it wider. That is something we are actively looking at, and we are also looking to address some other areas of the legislation that we believe would benefit from being tightened,” Leslie Ward disclosed.

The director said when her department realized the challenge it faced in being able to help people recoup any money lost through these schemes, officials had to do the next best thing and embark on a campaign to warn Barbadians against investing in them.

“Everything that we could do to spread that information, we did. But it was not a case in which we felt the public did not know. These are challenging times and there are unprecedented times, so I think people wanted to hold onto it and did not necessarily want to hear what we were saying; but unfortunately now, they have to deal with the repercussions of this situation,” Leslie Ward told Barbados TODAY.

The FTC official also said she has not seen so many pyramid schemes in Barbados before and suggested that it may be a sign of the difficult economic times being experienced by people, particularly where the COVID-19 pandemic has taken many jobs or reduced the spending power in some families.

While dismissing the notion that a pyramid scheme is like a “meeting turn,” the consumer protection advocate, warned that the owners and scheme promoters are the ones who benefit most but those at the bottom are usually left empty-handed.

“A meeting turn is like a merry go-round but a pyramid is a top up thing where the top gets and the bottom doesn’t. If you look at the pyramid, the pyramid is always biggest [number of participants] at the bottom; and it is always the many who will be scammed. A few will get, but the few who get is a part of the whole psychological trick,” Leslie Ward explained.

She also cautioned Barbadians to be wary of certain online market places or investment opportunities which are being disguised, but are in fact pyramid schemes.

“When we did our own investigations, we felt that these things were not investment opportunities, but there were in fact pyramid schemes. We realized that the scammers were becoming more crafty and they were using these tactics to get consumers to divorce themselves of their hard-earned money. We realized that they started to take advantage of a well-known market tactic of seeking to build trust through family, friends and colleagues,” she pointed out.

“How they were able to capture people is by providing the social proof. Like for example, if I knew some person who is quite popular, they would have used that person as a spokesperson for the group and because of that, there was a certain level of trust that people would have engendered in that. What they did was also made sure that some people got their money,” Leslie Ward stated.

She told Barbados TODAY that her department has even had to turn down people who applied for approval to operate “meeting turns” when they were really pyramid undertakings.

She said while there are no cases at the moment of anyone losing money, there have been many complaints from people criticizing the department for seeking to regulate these schemes.

Leslie Ward noted that on the other hand, Barbadians have been requesting information about the same schemes.

But while the Consumer Protection Department may not have the full legislative backing to prosecute at this time, the Financial Crimes Division of the Royal Barbados Police Force (RBPF) has made it clear that all it needs is a formal complaint that a fraudulent act has been committed for an investigation to start.

“You must have a complainant in some matters to pursue a case. In the case of murder, you don’t need a complainant.

But if I am defrauded of something and I don’t come forward, how would the police officer know that something has happened to you? If you rob me and I don’t say anything or somebody who saw, doesn’t say anything, we wouldn’t know,” Head of Financial Crimes Assistant Superintendent of Police Markeith Gibson Woodruff said on Tuesday.

In response to a woman who reported to Barbados TODAY that she has been trying unsuccessfully for the past four months to receive her refund from a blessing circle allegedly run by popular radio personality and entertainer Kirk Browne, Gibson Woodruff said her department does not have any complaints related to that matter under investigation, However, she too has warned Barbadians that pyramid schemes are illegal and should be avoided at all costs.

“I would advise them not to get involved.

But then you would hear other circles saying that they were involved and nothing happened. It is when something happens that it becomes a problem,” the senior police officer declared.

Sydia Drayton is one woman who claimed she has been waiting for the past four months to recoup the $2,000 she invested in the ‘blessing circle.’ In tracing the events that led to her having to pull out of the scheme, Drayton recalled how she was introduced to the online “circle” by a female friend.

“This girl [name withheld] came to me telling me Kirk Browne leading in this blessing, a $1000, and you had to bring in two people. So I used my name and my mother’s name. She said if you don’t get anything you can get your refund. I asked her ‘you sure if the scheme doesn’t come through you get back your money?’ She said ‘yes, yes man,’” the distraught investor recalled.

She said she, therefore, agreed to enter the “circle,” but that after a couple months she heard nothing concerning her “blessing” turn.

“After this I said ‘I want back the money’ because nothing is happening and every time she giving me a story. She telling me I got to go to Kirk. I told her, ‘But I gave you the money. I didn’t deal with Kirk, I dealt with you.

“She gave me the number and told me to call him and he didn’t answer, but he would put a girl to talk to you. She told me ‘you can’t come out so, you got to give it some time.’ But I said ‘I am not seeing anything and nobody is saying anything.’ So she told me that in three weeks’ time I would get money,’” Drayton stated.

The upset woman told Barbados TODAY that was back in June and up to the present time, she has not received a cent back of the $2,000 which she invested on her behalf and that of her mother.

Drayton said she has also been calling Browne but with no success.

Barbados TODAY also reached out to him on several occasions by way of WhatsApp messaging and telephone calls but there has been no response.

However, when contacted, the woman who introduced Drayton to the scheme also related her side of the story.

“She put in $2,000, yes. I invited her in and I told her about the blessing circle,” the laid off hotel worker said.

“What happened is that the circle went downhill because people started telling lies about Kirk Browne. People that had their ‘fires’ to come on so I could help get Sydia bless out, the people were hearing all of these bad things about Kirk Browne, so they decided not to come any more,” said the woman who preferred to remain anonymous.

“So if people don’t join, it would go downhill. Up to last week I spoke to Sydia and told her it is going to take some time,” she pointed out.

While acknowledging that these schemes are risky, she is adamant that it is not going to deter her even though she had also lost thousands of dollars.

“The thing about these platforms, these circles are a risk. When you put your money in these circles it is a risk. The FTC [Fair Trading Commission] tell we it is a risk, ‘do not go in.’ So if they tell we don’t go in and we go in…you know how much money I lost in these circles? $3,500,” she declared.

She added: “The money was paid out to people and when you call back and say you want back the money because people want back their money, the people telling you they done spend the money. So what are you going to do?” she asked.

“I see people getting through and I am still risking it. I put in $500, $800, $400, $250. I put in money for friends, then ain’t get back, but I never stopped. Since then I went in other circles and I got back all of my money that I lost,” the participant added.

She also admitted returning to Drayton to get her to participate in a second scheme.

On his Instagram platform, Browne defended pyramid schemes.

“I think we as human beings have turned a pyramid scheme into something negative.

A pyramid is one of the most powerful things on earth,” he stated.

And in a Youtube video currently making the rounds on social media, a foreign blogger severely criticized the circle operated by the Barbadian singer. emmanueljoseph@barbadostoday.bb

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