Beware of get rich quick schemes!

According to the National Association of Stokvels of SA, Stokvels are defined as voluntary groups of natural persons bound by a common cause who pool financial resources for the benefit of the group (

Traditional stokvels are a trusted savings mechanism in South Africa.

Unfortunately, unscrupulous scammers have found a way to rob unsuspecting stokvel savers of their money by starting something that pretends to be a stokvel, but which is actually nothing more than a pyramid scheme in disguise.

One example that seems to be happening more often lately is the “WhatsApp stokvel group” or “WhatsApp gifting”.
This is how it works: You are invited to join a WhatsApp stokvel group (which is basically a WhatsApp chat group), but before you are added, you must pay a joining fee of say R200 with the promise that you will earn around R1 000 if you recruit two more people to the group.

Clearly this is not the traditional way of saving in a stokvel. You make money by recruiting more members instead of investing your hard-earned money for a certain period.

Just as with any pyramid scheme, as new recruits become difficult to find, the money will dry up and leave members without a cent.

What is a Pyramid Scheme?

Scammers use pyramid schemes to get your money. They will lie to you about an amazing investment opportunity and are very convincing. This is a fake investment. In a pyramid scheme, money is raised by recruiting other people into the scheme rather than from buying or selling any product.

How will you know if you are being scammed?

  • Unrealistic returns offered in short periods of time.
  • An initial or joining fee is required when it comes to scams.
  • You need to recruit more people to join the scheme.
  • You have no knowledge of where your money is going as no product is bought or sold.
  • The opportunity is sometimes disguised as a stokvel or something else and promoters (people who recruit “new members”) may even use virtual currencies like Bitcoin to sidestep the formal banking sector where they could be detected.
  • Promoters are not registered anywhere.
  • There is no way of tracing where the scheme or promoter comes from.
  • There is no one to turn to in order to get help.

How to avoid pyramid schemes:

  • Use a registered Financial Service
  • Provider and authorised Financial
  • Advisor when buying financial products.
  • Do not rush. Research the company you want to invest your money with.
  • Be wary of opportunities to get rich quick.
  • If it sounds too good to be true, it probably is too good to be true!

If you suspect you have been defrauded due to a pyramid scheme, please report this to the South African Police Service. The National Consumer Commission (NCC) and the South African Reserve Bank also have jurisdiction and can be reported to. Go to or Information about illegal pyramid schemes can also be shared with SABRIC. Go to or call 011 847 3000.

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