They're in denial

How many people involved in scams know that they’re scams?

Did the people recruited into Eurextrade know that it was a Ponzi scheme that would eventually collapse, leaving the victims penniless? Or were they all convinced that it was something genuine?

During the Eurextrade fiasco I came back to the office from a radio appearance when I’d mentioned Eurextrade and had warned people about the dangers it posed. Before I even sat down the phone rang and a call was put through to me from someone who had already “invested” in the scheme. He was very angry with me because of what I’d said. It wasn’t true, he said. He’d made a profit from the money he’d given them. How much, I asked? P3,000.

So I asked him how much he had deposited in order to make that amount. P10,000, he told me.

For the next fifteen minutes we argued about whether he was P3,000 in profit, as he claimed, or whether he had just lost P7,000, as I suggested.

I think I was right. He certainly didn’t call again to correct me after the scheme collapsed, taking almost everyone’s money with it.

The same happened with Stock Market Direct, the stock market training program run by the sharp-suited and smooth-tongued Tony Samuels. Lots of people thought they were getting a great deal by paying vast amounts to SMD every month for training and trading tips, even though the tips actually came from a (legitimate) South African company who sold them for a quarter of the price SMD offered them for. I heard from many people who felt they were on to a good thing and were going to make lots of money.

But that wasn’t true either. Tony Samuels was last seen heading for the border with several million Pula from his victims. Incidentally, even though many people met him, there’s no evidence that Tony Samuels actually existed. Yes, someone with a nice suit existed, but nobody knows his real name and it doesn’t seem to have been Tony or Antonio Samuels.

But how many of the people involved knew what was really going on with Stock Market Direct, Eurextrade and all the other scams like TVI Express and Success University? Certainly the organizers were the guilty ones and they knew they were running a scam. But what about the people they’d recruited?

Some clearly had no idea. They’d been seduced by the offers of riches and a better lifestyle. A lot of them genuinely believed what they’d been told was true. Gullible, naïve, perhaps even foolish but innocent nevertheless.

But then there’s are groups between the guilty and innocent. There’s a number of people who aren’t sure it’s a scam but they think that they’re special cases. A small number are convinced that if they join early enough they might be part of that very small proportion who make a little profit. Another group feel that they possess some superior knowledge about how these schemes work, often because they fell victim to an earlier scheme and now think they’re wiser and more learned as a result of that experience.

And then there’s the group that are in denial. This group have persuaded themselves that even though reason, logic and common sense say it’s a scam, they can’t face up to that fact and convince themselves that there’s still hope.

Last week I heard about perhaps the greatest case of denial I’ve encountered in a long time. Someone called our office to ask for advice about a younger relative. The younger guy’s mother had recently died and he had inherited not only her house but money as well. That was the source of the older relative’s concern. Apparently the younger guy had transferred the bulk of the inheritance overseas, claiming he’d been told about a remarkably lucrative investment opportunity. He’d shown some documents that had immediately worried the older guy. They didn’t look legitimate and he’d told the victim this. Nonsense, he was told, all I have to do is transfer some more money and they’ll give me vast returns.

So how much had he handed over so far? A few thousand Pula? Maybe more? Maybe tens of thousands? No. So far he had handed over eight hundred thousand Pula and he was about to hand over another three hundred thousand as well. The relative was even concerned that he might try and sell the house as well to raise further capital.

Tragically, the younger guy seems to be in complete denial. Of source it IS possible that he has invested the money wisely, but if that’s the case why is he keeping all the paperwork under lock and key and why won’t he discuss it any longer? What uncomfortable truth is he afraid to face?

In many ways the people in denial are harder to persuade that the gullible and naïve. The deniers have invested so much emotional energy and commitment into justifying their decision to themselves that they face what psychologists call cognitive dissonance, the intense mental discomfort involved in hold two contradictory positions. They simply can’t face the trauma of acknowledging that a smart person like them has made such an unwise decision. So they deny it completely. Like the guy who had lost P7,000, he had convinced himself that he was in profit by P3,000. Like the people who are currently “investing” in Billcoin, a Ponzi scheme that promises 80%, many of whom must realize that 80% per month is utterly impossible. They know it really, deep down, but they’re not prepared to admit that they might have made a mistake.

Which they most certainly have. The real tragedy is that they’ll refuse to acknowledge their mistake until it’s way too late and probably after they’ve thrown even more money, time and emotion into a large hole in the ground.

How to lose money

I’m certainly not an expert on how you can make money but I do know how you can lose it.

A few years ago we had a visitor to our office. A tearful woman, an intelligent professional in a large organization, had been abused. Could we help?

It turned out that she had been approached by some people who encouraged her to join TVI Express, a company that they said sold travel discount vouchers to their members. In fact the real business of TVI Express was recruiting other people into multiple layers of recruits. It was a pyramid scheme.

Fortunately for her (and unwisely for the people who recruited her) they offered her a written contract to sign. This contract, which she signed in January 2011 when she “invested” P30,500, offered her: “the promise to reap an amount of P84,000 on or before the 10th March 2011 and another P84,000 on the 31st April 2011.”

As you can imagine there was actually no “reaping” of anything and she got precisely nothing from her membership of this pyramid scheme. Are you surprised? What sort of scheme can take P30,500 and turn it into P164,000 in just three months?

You’re right, no scheme can do this.

TVI Express, which was subsequently banned in Namibia, Lesotho, Indonesia and the US State of Georgia, very quickly collapsed but only after it had taken a lot of money from a lot of people. Almost all of them got nothing in return. Our tearful visitor was one of the lucky ones, all because of that contract the foolish people offered her. She didn’t get the riches they had promised her but we were able to force them to give her the P30,500 back. Eventually.

But, you’ll say, we learned our lesson from that scheme, didn’t we? No, unfortunately we didn’t. TVI Express was very quickly followed by WorldVentures, an almost identical pyramid scheme that also claimed to trade in travel discounts. WorldVentures still exists today.

Pyramid schemes like these are very good ways to lose money.

Then there was the big one. The one that we should have learned from: Eurextrade. I suspect that more people lost money in the Eurextrade Ponzi scheme than any other scam Botswana has ever seen. Certainly some people lost a lot of money. We heard of one victim who sold two houses and a Range Rover so he could “invest” in the scheme, hoping to earn the 2.9% daily interest they promised. Needless to say he lost it all. While we were doing our best to alert people about the scam I received a very angry call from one investor who told me about how he was making a lot of money from it. He told me that so far, he’d received P3,000 in profits. So I asked him how much he had invested so far. P10,000, he said. We then had a lengthy argument where he tried to persuade me that he was up by 30% and I tried to persuade him that in fact so far he’d lost 70% of his investment. I never heard from him again.

Some of the other victims were less wealthy. A reader contacted us shortly after a public holiday when she had returned to her home village, telling us that “all the Grannies” in the village had given their entire life savings to a guy who recruited them into the scheme. They are the one I feel sorry for, not the guy with (but now without) the houses and the car.

Ponzi schemes like Eurextrade are also very efficient ways of losing large quantities of money.

While the stock market can be a very good place to invest your money, it’s surrounded by some dubious characters who are keen to help you part with your hard-earned money. Do you remember Stock Market Direct, the supposed stocks and shares training company whose founder ended up skipping the country with the millions he’d taken from the people he’d persuaded to let him invest for them?

Then there are all the little scams that come and go (often with your money).

Karatbars was a German scheme that involved buying minute quantities of gold and which promised riches as a result. In fact the price you paid to buy this gold was much higher than the real gold price and besides, the price of gold has been steadily dropping since 2012 so it’s hardly a great investment. What was more interesting was how they marketed their business in Botswana. One of their local representatives claimed that the German Embassy, the Department of Mines and BURS had all endorsed their scheme. This wasn’t true and I know this because I asked them and they all denied it. Then came an even bigger lie. They said that the “doubting thomases then went to consumer watch dog. They also gave us a thumbs up.”

That was a complete lie. Not only had we never given then “a thumbs up”, in fact we’ve been saying that they’re a pyramid scheme and that people shouldn’t ever, under any circumstances, join their ridiculous scheme.

Karatbars was just another way to lose money.

These are just a few examples of the ways unscrupulous people will help you lose money but there are many, many more out there. You and I really have to be increasingly skeptical of almost everything someone tells us, particularly if the person wants us to hand over our hard-earned cash and particularly if they claim they can make us rich.

The more things change...

The French have a saying: “Plus ça change, plus c'est la même chose”. The more things change, the more they stay the same.

That was 2014 at Consumer Watchdog. Everything changed but everything stayed exactly the same.

Pyramid schemes were still here. Even though some, like TVI Express, had long disappeared we still heard from people who were selling World Ventures, a ridiculous holiday discount scheme.

World Ventures claim to sell holiday discount vouchers and they say that these vouchers can drastically reduce the price of holidays, hotel stays and travel in general but in fact they’re just a pyramid scheme pretending to have a product. Let be clear. A discount voucher isn’t a product, it’s a reduction in the price of a product. What they’re really interested in is you recruiting more and more people beneath you, forming the pyramid that makes the people at the top so much money.

In the USA World Ventures are required to publish their earnings figures and they tell the real story. Three quarters of all people who join World Ventures don’t make a single cent. 90% of all the money earned in World Ventures is earned by the top 1%. Only one American recruit in a thousand makes more than average national earnings from the pyramid. Why would it be any different here in Botswana?

Then there was Karatbars, a German scheme that involved buying minute quantities of gold and which promised riches as a result. In fact the prices you had to pay to buy this gold were much more expensive than the real gold price and besides, the price of gold has been dropping dramatically in recent years. That’s hardly a great investment, is it?

However the best thing about Karatbars was a claim one of their local distributors made: “the doubting thomases then went to consumer watch dog. They also gave us a thumbs up.”

That was a lie. We had not, did not and will not ever be giving “a thumbs up” to Karatbars or any other pyramid scheme. Anyone who says we have is a liar.

Despite the national lesson we had with Eurextradewe were still prone to the Get Rich Quick claims of Ponzi schemes. The most recent Eurextrade clone called itself Invest Partnership and it really was remarkably similar to Eurextrade except that they were even more ambitious in their claims. For instance they suggested that if you give them between $3,000 and $5,000 you could make 2% every day.

Elsewhere they claimed that if you invest $2,500 for a mere seven days you would make 15% every day, more than doubling your money in that week. I calculated that if you kept reinvesting your profits in this scheme for an entire year your earnings would be 400 billion times more money than exists in the entire world.

Fake qualifications were also still around, despite a growing understanding of how easy it is for someone with nothing other than money to get fake degrees. Last year we managed to irritate the fake degree industry so much that one of their organizers even went to the trouble of setting up a blog suggesting that I am “a paid blogger”. They suggested that I get “paid to publish and create different sort of blogs just to defame organizations” and that I charge “$2000 for this service. His aim is just to confuse consumers to get the good and real things and education. Kindly do not publish his blogs and believe on him. He is a big big big liar.”

Frankly I wish I WAS paid $2,000 for every blog entry I’ve made because by now I’d have earned $2,538,000 and I’d be writing this from a beach somewhere.

However the fake qualification industry evolved a little and is now selling fake professional membership schemes. The Gulf Project Management Association and the American Bureau of Project Management Experts will both sell you membership of their bogus organizations for nothing more than a credit card payment. No qualification, experience or skills are required, all that’s needed are your 16 plastic digits.

Then there were the fake healers and prophets so keen to separate us from our money (and health). One, the particularly courageous “Healer Nkunumbi” even managed to sneak into our Facebook group and post advertisements offering his solutions for a range of problems:

“lost lover, Marriage problems, stop your partner from cheating on you, Men and women who can’t have Babies. Breast, Hips, Bums, penis cream/. Business boost, Penis Enlargement and power in all sizes. Win court cases, promotion at work.”

He then showed how sophisticated he was by posting this:

“Sow a seed of P38 and see waht god will do in the next 38 hours............e-wallet by faith”.

Magic using hi-tech banking? Impressive.

The humor then stopped when he proved how dangerous he really was.

“Testimony............3 people are reporting to be healed H.I.V AIDS yesterdy after my meeting with them.”

That’s simply not funny any more. That’s dangerous, just like all the other crooks selling miracle cures to the naïve, gullible and desperate.

So the lesson is simple. Nothing changes. The individual crooks, charlatans and thieves might change, the names they give themselves and their businesses change and their particular tricks might change but their desire to steal our money remains exactly the same. It’s no surprise really. Despite what people say, “the oldest profession” is actually theft and it’s not going anywhere soon. It’s going to be up to us to fight against it using the only weapons we really have: skepticism, love for our neighbours and a willingness to confront thieves when we see them.

Want to see the pyramids?

I’ve never been to Egypt so I’ve never seen the pyramids. But I have seen a number of pyramid schemes and you don’t need to travel far to see them too.

One of the first we encountered called itself “Success University”. Like many pyramid schemes, they claimed to have a product that they sold. In this case it was a range of mass-produced DVDs containing supposedly “motivational” materials. In fact these were nothing of any value, the real business they were selling was recruitment. Rather than selling the worthless DVDs your real task as a new recruit was simply to recruit other people beneath you and then to encourage them to recruit others beneath them. And so on as you build a pyramid beneath you with each level funneling money upwards.

Of course, as with all pyramid schemes, this doesn't happen easily. There simply aren't enough gullible and naive people around to recruit, certainly not enough to form multiple levels beneath you. We sent people undercover to several Success University presentations and the story was always the same: Join the scheme and you can be rich. They even went so far as to promise specific earnings, saying that you could earn $50,000 per year (currently about half a million Pula) from the scheme. Lies of course.

One of my biggest learning experiences with pyramid schemes came after we first started warning people about Success University. They don’t take kindly to criticism. I arrived at our office early one morning to find four men waiting at the door. They were, they said, from Success University Head Office in South Africa and they were going to speak to me. Fortunately they were polite, even when they said that what we had been saying about their scheme was untrue and they were going to sue us. What, I asked, had we said that was untrue? Could they justify their promises of riches? Were their products of any real value? Were they actually entitled to call themselves a “university”?

Silence.

Nothing. I think the secret recordings we had made in their presentations helped persuade them that we had evidence on our side as well as some understanding of how pyramid schemes work. They were also somewhat subdued following rulings by the Bank of Namibia that they were an illegal pyramid scheme and that Namibians should steer clear of them if they valued their money. They went away from our office without the apology, the retractions and the retreat they’d expected from us.

Within weeks Success University disappeared from Botswana.

A few months later a new pyramid scheme appeared, this one lasted a lot longer and did a lot more damage. TVI Express was founded by an Indian man called Tarun Trikha and again the key part of this scheme was the recruitment of other people but they also claimed to have a product to sell. Their "product" was a range of holiday and travel discount vouchers. Apparently these got you massive discounts on flights, hotel stays and car hire. Despite what you might suspect, this was actually true. Yes, you could get these discounts but only if you chose from a VERY limited number of resorts, airlines and hire companies, none of which operated in Botswana. In fact I could only find one holiday resort in South Africa was associated with the scheme.

But there was another factor that they neglected to mention and which the victims recruited failed to notice. A discount voucher is not a product. It's just a price reduction against a product that you still have to buy for real money. Then add in the other fact that nobody ever has to buy discounts from hotels, airlines and car hire firms. Almost all of them offer discounts for free. A little internet searching will get you all sorts of discounts for nothing.

So TVI Express had no actual product and the riches it offered its victims were all based on recruiting other people beneath them. A pyramid scheme.

TVI Express lasted longer than most pyramid schemes but inevitably it finally collapsed when they ran out of people to recruit and when more and more potential victims knew about them already.

Then another came along. This was called WorldVentures and was yet another holiday discount scheme. However the curious thing that emerged was that WorldVentures had taken recently control of Success University. All the poor fools recruiting others into a business supposedly selling motivational DVDs had to switch to selling discount vouchers. Doesn’t that hint that the “products” are entirely irrelevant to the business they are trying to run? It’s a bit like your company changing one day from selling second-hand cars to selling funeral policies. It would be unthinkable in a real business.

But pyramid schemes aren’t real businesses. They’re scams. Yes, they’re persuasive, yes they promise riches and fabulous lifestyles and yes they have very smart-talking recruiters. But they’re still scams that will take your money and that will never give it back to you.

WorldVentures is one of the longer-lasting pyramid schemes but it won’t be around for much longer. I’ve known of them for over 4 years and they’re still quietly active here in Botswana but the net is closing in on them elsewhere. The Gaming Board in Norway has recently announced that following a lengthy investigation they are certain that WorldVentures is a pyramid scheme. Their main criteria for deciding this was simple. 95% of all the money paid out to recruits in Norway was for the recruitment of other people, not from actually selling things.

The fact that regulators around the world are closing in on a scheme is usually a sign that it will collapse soon, just like Success University did. The bad news is that you can rest assured that within weeks they’ll be back again using a different name and a different “product”. Pyramid schemes are as old and tenacious as the pyramids in Egypt.

The Voice - Consumers Voice

Dear Consumer’s Voice #1

I would kindly like your assistance in verifying whether X-forex trading is not a scam. I recently registered with them and was advised about the good investment forex trading can be. What disturbs me now is their persistence for me to give them my bank card details and that I need a minimum of $100 to trade. They claim to operate from Australia.

Please assist before I lose my hard earned money over a scam.

I’ve been asked by many people about XForex, often asking if it’s connected to the Eurextrade Ponzi scheme scam that collapsed earlier this year. XForex is slightly different, it does actually seem to be a legitimate mechanism, but makes promises that are absurd. The first thing to mention is that ordinary people like you and me don’t make money by trading foreign exchange. The market is so volatile, the changes usually so slight and the companies like XForex so suspicious that we’re not going to make a fortune, if anything from it. Think of it this way. If big commercial banks don’t make fortunes this way with the trillions they have to invest, how can mere mortals like us? The only people making money from Forex trading are the people running the companies encouraging us to cough up our cash.

I think you can judge these schemes by the way they recruit new victims. Eurextrade snared people by accosting them on the streets and in spicy chicken restaurants, XForex do it on Facebook by making extravagant claims. One advert on Facebook showed a room full of hundreds of scattered banknotes, announcing that:

“Mr.Baruti From Botswana Has Made $5024 From EUR/USD Trading Last Month!”

It went on to say that “It Is So Easy To Make A Second Income! Take Your First Step In To a Wealthier Future!”

The picture they use, by the way, is a stock photo available on the internet, it’s nothing to do with XForex. You can tell this scheme can’t be trusted, can’t you?

Dear Consumer’s Voice #2

Hello, a friend came to me with an interesting opportunity called WorldVentures. I'm not too sure of its authenticity and was hoping that you guys could look into these guys for me?

WorldVentures is yet another pyramid scheme, operating along the same lines as TVI Express which ripped off Batswana a couple of years ago. WorldVentures claim to sell holiday discount vouchers and they say that these vouchers can drastically reduce the price of holidays, hotel stays and travel in general but that’s just untrue. They’re just a pyramid scheme pretending to have a product. Let me be very clear. A discount voucher isn’t a product, it’s a reduction in the price of a product. What they’re really interested in is you recruiting more and more people beneath you, forming the pyramid that makes them so much money.

WorldVentures are required in the USA to publish their earnings figures and they tell the real truth. Three quarters of all people who join WorldVentures don’t make a single cent. 90% of all the money earned in WorldVentures is earned by the top 1%. Only one American recruit in a thousand makes more than average national earnings from the pyramid.

Just like TVI Express, the founder of which was recently arrested in India, WorldVentures is something to be avoided. It’s a waste of time, effort and money and I urge you not to become a victim. If you want a discount in a hotel, there are plenty of ways to get them without coughing up loads of cash to join a pyramid scheme. Join a hotel loyalty club that offers you something for free, or use free web sites like Bid2Stay in South Africa.

Pyramid schemes don’t make you rich. They make you poor!

TVI lead in South Africa arrested

Image c/o IOL News

The lead crook in the TVI Express network in South Africa, Nonhlanhla Hadebe, has been arrested and presented with a charge sheet of 10,000 counts.

"Already stripped of her Aston Martin and Mercedes-Benz, wealthy Musgrave businesswoman Nonhlanhla Hadebe, 49, found herself in the dock of Durban’s Commercial Crime Court on Tuesday charged with contravening the Banks Act by taking almost R86 million from “investors” in what was alleged to be nothing more than a pyramid scheme."

Shame.

"In a dawn operation by the Anti-Corruption Task Force on Tuesday, she, her husband, Jabulani Hadebe, 47, her daughter, Hlengiwe Ngidi, 29, and son-in-law, Sibusiso Ngidi, 34, were arrested and charged with more than 10 000 counts involving investments in three schemes between March 2009 and September last year.

They were not granted bail and spent Tuesday night in Westville Prison."

Even more of a shame! Actually it's hilarious.

Thanks (yet again) to Kasey Chang for the update.

Another reader comment. Bank of Botswana, are you listening?

Another comment from a reader, this time on Facebook:

"You are doing a great job. We just don't listen. I remember my friends used to think you are jealous when you spoke about Eurex, we were even talking about you the day before it collapsed. They lost and now respect but they can't tell you because they are ashamed, one thing I can tell you, they read your articles every week!!"

My reply went like this:

"Many thanks for your very kind words. One of the things that makes me angriest about scams like Eurextrade is the position in which it leaves decent people once the scheme collapses. The shame that victims feel can be as bad as the financial loss they experience. Yes, you can argue they were gullible but that doesn't mean they aren't suffering. I just hope they can convert that shame into justifiable anger that can be directed towards the local recruiting agents for the scam. And towards the various regulators with the power to stop these schemes. Yes Bank of Botswana, I'm sorry, I DO mean you. See Section 3 of the Bank of Botswana Act. You have the power."

Section 3 of the Bank of Botswana Act includes:

"3. Authority to transact banking business

(1) No person shall transact banking business in Botswana without a valid licence issued by the Central Bank."

"Banking business" is defined in the Act as, amongst other things:

"the employment of deposits in the making or giving of loans, advances, overdrafts or other similar facilities, and in the making of investments" (my emphasis)

Eurextrade sold itself as an investment scheme, as did Oil of Asia, Felmina Alliance, even pyramid schemes like TVI Express. Bank of Botswana have the power and the duty to step in and stop these things.

Ah, you might say, but these schemes operate overseas in scammer-havens such as Panama and the British Virgin Islands. That's true, but who does the recruiting for these schemes? People in Panama and BVI?

No, our neighbours do, people right here in Botswana.

But do the Bank of Botswana have the power to intervene? They most certainly do. Section 5 of the Bank of Botswana Act ("Investigation of unlicensed banking") empowers them, if they believe someone "is transacting business in violation of section 3", to inspect and retain "all books, minutes, records, cash, securities and any other documents in such person's possession or custody".

If they find evidence of wrong-doing they can then "order such activities to be suspended forthwith".

Failure to comply with the inspection can lead to the perpetrator becoming "liable to a fine of P10 000 and to imprisonment for three years."

Failure to comply with an order to stop any illegal activities can then lead to the perpetrator receiving "a fine of P2 000 for each day on which the contravention occurs or continues to occur, and to imprisonment for three years."

So let's get on with it, shall we, Bank of Botswana?

TVI Express - the founder behind bars?

Tarun Trikha.
Image c/o Daily Mail India

Tarun Trikha, the crook behind the TVI Express pyramid scheme has new accommodation.

A police cell.

According to the Daily Mail India Trikha was arrested when he arrived at Delhi airport, following charges laid against him by a variety of victims.

"A lookout notice was issued for him since he was on the run since 2011. He was arrested at the Delhi airport while trying to flee to Nepal," said Syed Waqar Raza, special superintendent of police, West Bengal CID.

There's a even a report that his entire family are under investigation for their role in the fraud.

It's just a shame it's too late for his various victims. It's a shame that the the people running the scheme in Botswana weren't all made to pay back the money they knowingly took from other victims.

It's also a shame that the authorities in Botswana didn't follow the examples of their cousins in Namibia, Lesotho, the US State of Georgia, Indonesia, Australia and South Africa and DID something to protect their people.

TVI Express: Screwing Up Lives Globally

"Knowingly"? Isn't that going too far? They knew they were involved in a scam? They didn't recognise a pyramid scheme when they saw it? When they were involved in it? When the clues were so obvious that it was a scam? Even to the TVI Express recruiters here in Botswana like the ones that appeared on radio opposing me and proceeded to lie, distort and makes fools of themselves.

Which part of this does NOT look like a pyramid scheme?

Ok, "knowingly or stupidly".

The tragedy is that are no doubt TVI Express organisers still out there imagining that they'll get their money and effort back somehow.

[Thanks, as always, to the ever resourceful Kasey Chang for the news.]

TVI Express busted in South Africa

The excellent South African Reserve Bank get tough with TVI Express. Well done!
SA Reserve Bank bust TVI Express



- Posted using BlogPress from my iPhone

TVI Express "busted" in Australia

The Australian authorities have taken firm action against local reps of the TVI Express pyramid scheme over there. The chairman of the Australian Competition and Consumer Commission, Rod Sims said:

"Pyramid selling schemes are not legitimate businesses but scams promising the rewards of easy money that never arrives"

"People who are tempted to take part in pyramid selling should note the serious penalties they could face."

The fines levied against these crooks totalled AU$200,000, around P1,500,000.

If you don't believe that they're a pyramid scheme, take a look at this. It's enough of a clue.

[Thanks to Kasey Chang for the alert.]

Are TVI Express ignoring laws?

From the Sunday Express in Lesotho:

"The Central Bank of Lesotho (CBL) has again warned the public against investing their monies in a pyramid scheme operated by Travel Ventures International (TVI) Express."

Companies that persistently ignore the law tend to end up with their Directors behind bars.

[Thanks again to Kasey Chang for the news.]

TVI Express "frozen" in Indonesia

TVI Express is now utterly and completely illegal in Indonesia. Not just a bit illegal, utterly illegal. So that's Namibia, Lesotho, the US State of Georgia and Indonesia that have completely outlawed them, Australia and South Africa that has them on the run and the entire world who understands that they're a pyramid scheme. Where next?

See here. You'll need to use Google Translate to read it, unless you read Indonesian?

[Thanks to Kasey Chang for the news.]

Life's a gamble

I don’t ever gamble. Well, not in casinos or lotteries. That’s mainly because I’m pretty good at maths. I know that the chances of winning in either of these situations are seriously low and I know that, on average, gamblers spend more money than they win. Yes, I know we’ve all heard of people who’ve won a fortune but that’s only after hundreds, thousands, perhaps even millions of other less fortunate people have lost. It’s the loser’s money that the winners win. And there’s still enough left over to make healthy profit for the organisers.

Frankly I’d rather keep my money and play safe rather than throw it into a big hole marked “gambling”.

Gambling is about the unrealistic management of risk. What you and I need to spend more time doing is realistically managing the risk we face. The best example I know is insurance. Insurance is an unbelievably useful thing. I know from personal experience. I bought a second-hand car from a major dealership a year ago. It was only a few years old but because it was fairly new they offered me an extended warranty for just over P3,000. My initial reaction was to say no, but I gave it a moment’s thought and signed on the dotted line. Last month it was diagnosed as needing a new gearbox and the extended warranty is now contributing P12,000 towards the cost. That was a good gamble on my part and I’m feeling pretty proud of myself for saving nine grand.

However I’ve been personally accused on several occasions of taking unnecessary risk. Mainly this resulted from me calling the so-called “traditional healers” who advertise in local newspapers as a bunch of lying, cheating, scheming scumbags. Despite some of my more superstitious friends and readers who believe there might be something in their miraculous claims, I genuinely, truly believe that these people are liars. They know they have no paranormal skills, they know they can’t cure the disorders they claim to control and they are perfectly aware that they are criminals. I am convinced that they are consciously abusing the public. They are a very low form of life and they deserve to be condemned.

However, even though I’ve had some threats from these scumbags, including promises of instant death, lightning strikes and eternal damnation, I’m prepared to take a chance and run those risk. None of these things has happened yet and I think it’s a fairly safe gamble they won’t ever.

Unfortunately not everyone has my confidence in mathematics.

We had an email recently from a reader who wanted to complain about a competition being run by one of the cellphone providers. He had some valid questions about how the competition was run and how the winners were selected which we’ll pass on to the provider running the competition but there was a line in his email that amused me. He finished the email by saying:

“I have so far spent close to P500 in the last 3 weeks and not won. I am now beginning to suspect the process.”

Where should I begin? Do I really need to say that when you enter a lottery, unless you buy every single available ticket, there’s no guarantee that you’ll win? Do I need to say that just wanting to win isn’t enough? Do I need to say that gambling just isn’t fair, that some times (in fact almost every time) you lose?

Unfortunately it’s only when you learn the mathematics of lotteries that you realise that they’re simply not worth your time any money. Ask yourself this every time you see a competition. Are they being generous or being selfish?

Personally I think that the ignorance, or perhaps I should be polite and say “naivete”, that leads people to throw their money into lotteries and casinos is exactly the same that leads people into pyramid schemes. Anyone with a basic knowledge of maths will know that a business model that offers income in proportion to the number of people you recruit, and the numbers they in turn recruit and so on, is destined to fail. We understand exponential growth and understand that it can’t be sustained in a limited population. We understand that pyramid schemes, all pyramid schemes, without exception, are destined to fail.

But those without an understanding of maths are at a profound disadvantage. They don’t understand, for instance, that anyone who joins a criminal scheme like TVI Express is going to lose money. That’s just a fact. Just as it’s a fact that they’re criminals. TVI Express has been outlawed in Namibia, Indonesia and the US State of Georgia. They’ve been investigated by authorities in a host of other countries and without exception these authorities have ended up warning consumers to steer way clear of them. A matter of days ago it was also outlawed in Lesotho. With a little luck it’ll be outlawed here in Botswana as well. Unfortunately until it’s outlawed here people will continue to fall for the lies that TVI Express people tell to recruit people and steal their money.

But do I blame the victims? No, they can be forgiven for naivete. Of course I blame the TVI Express distributors here and the founders abroad. Who are exploiting the mathematically naïve. I also blame a rather unlikely organization. I blame the Ministry of Education for not sufficiently educating our kids to protect themselves from scammers like TVI Express. I blame our educators for not equipping students with the skills necessary to protect themselves. I blame our national failure to teach maths in a fun way to more pupils. Not teaching our kids maths is perhaps the greatest gamble we can take.

This week’s stars

• The staff at the Sedia Hotel in Maun for “welcome with a smile”.

It works both ways

Or does it?

I was told recently that service “works both ways”, meaning that both the supplier and the customer have obligations to each other. Yes, that’s true but it’s also a cliché. We all know that. Or do we?

Many of the cases we’ve heard about over the last few weeks have started out sounding rather one-sided. The supplier has clearly seemed to be the guilty party. Until we started digging that is. That’s when it turned out to be the other way round.

A couple of weeks ago I mentioned a case in which a consumer had been very upset to find out that the brand new car she had recently bought didn’t come with a motor plan. Unfortunately she said she only found this out when she took her car for it’s first routine service and was presented with a bill. She and the dealer disagreed on whether she had ever been told this but it is true that the particular model she chose was particularly cheap exactly because it didn’t come with the motor plan. That was an optional extra.

We contacted the dealership and their MD was his usual helpful self. He called the customer in and offered her quite a good deal. Recognising that there had perhaps been a misunderstanding he offered her the motor plan for half price. So far so good. Frankly I think that’s a pretty good solution, don’t you? Unfortunately that’s when the customer decided to be ungrateful and ignore the offer. Some customers can’t be pleased.

We also heard from a reader who wasn’t too happy with the service he received from a furniture store. Some time after purchasing a music system and a bed in 2009 the music system was stolen. Despite reporting this to the police and informing the store about the theft he was disappointed when the store refused to replace his stolen items. He’d been told when he originally bought the items that they would be insured. You can understand why I was initially rather concerned. This seemed very unreasonable so I got in touch with the MD of the chain of stores. That’s when I heard the other side of the story. It turns out that what I’d been told wasn’t the entire truth. In fact the customer had bought the items 5 years before he claimed, in fact in 2004. He had then fallen into appalling arrears with his repayments. So badly that after 4 years they listed him with ITC and he still owes them a small fortune. Of course by being in arrears the insurance scheme didn’t apply any more and I can’t really blame them for that.

It’s interesting that in the past we’ve been accused by a small number of organisations of “always taking the customers’ side” in disputes but this simply isn’t true. While there are a few companies that treat their customers with contempt there are plenty who do genuinely understand that they have a responsibility to show their customers some respect and courtesy. However there’s a greater number of customers who think they can treat stores with contempt and that they can just ignore their side of the deal.

But it’s not always customer who’s wrong. There’s still no shortage of pyramid schemes out there at the moment, an epidemic of them. Despite having been declared illegal in Namibia and being under active investigation by both the Hawks and The Reserve Bank in South Africa, TVI Express continues to rip people off here in Botswana.

TVI Express is a scheme that suggests people can make money solely by recruiting other people beneath them. There’s a silly cover story about holiday discount vouchers but that’s sheer nonsense. The worthless vouchers they offer for a total cost of P3,000 can be bought online for a fraction of that price. The real essence of TVI Express is the recruitment of other people lower down the hierarchy than you. That’s the very definition of a pyramid scheme. In many countries around the world that’s illegal in itself. It’s illegal here as well if you can argue that the scheme makes fraudulent promises. That’s certainly true with the most recent victim of TVI Express we spoke to. She was encouraged to join the scheme locally and to “invest” P30,000 of her own money. She was invited to sign a contract in late January this year that contained a clause that offered:

“the promise to reap an amount of P84,000 on or before the 10th March 2011 and another P84,000 on the 31st April 2011.”

You just know, don’t you, that this failed? How can it have done anything else? How can P30,000 turn into P164,000 in the space of 3 months? If it was possible we’d all be rich by now. That’s the nature of pyramid schemes like TVI Express, they make extraordinary promises and always, always fail. They always leave everyone apart from the founder and his cronies poor.

So perhaps it does sometimes work just one way. Sometimes it’s perfectly clear who the guilty party is, whether it’s a customer who won’t play ball or a pyramid scheme that deliberately abuses it’s victims and steals their money.

This week’s stars

• Tankiso at Woolworths at the new Sebele Centre for putting a customer’s needs first.
• Kaisie at BPC for being helpful and for following up with a customer.

TVI Express banned in Lesotho

Following the ban of TVI Express in Namibia last year and the various investigations by The Hawks and The Reserve Bank in South Africa, TVI Express have now been declared illegal in Lesotho.

"The Central Bank of Lesotho would like to warn the public about the dangers of investing or participating in this particular scheme and other schemes of a similar nature. Furthermore, the Central Bank of Lesotho would also like to caution all promoters of TVI Express, including persons who attempt to recruit others, either by word-of-mouth or via spamming email messages to join these schemes, anywhere in Lesotho, to stop such practices immediately."

Botswana next?

[Thanks yet again to Kasey Chang.]

Anti-scam tools

It’s difficult, if you’re interested in human psychology, not to wonder why some people fall for scams and others don’t. What is it in some people’s brains that leads them to believe strange things while others seem to be able to spot a scam from a distance?

Of course a healthy level of scepticism is a good start. Not believing things that people say just because they’re saying them is a healthy approach, particularly if they want your money. At the very least, just asking questions and refusing to stop asking them until you get answers that satisfy you is a powerful thing to do.

But there are times when this isn’t good enough, you need to go a little further than just asking the obvious questions. You need to start doing some old-fashioned research. The good news is that in these days of Google research is a lot easier to do. Gone are the days of searching through electoral lists, phone books and state records to find someone. These days you can do it all with the click of a mouse.

Last week we heard from a reader who had received an unsolicited email that read as follows:

“all of my friends were sick of lending me money finally my aunt gave me a push in the right direction I knew I had to take advantage of this!
now I live a luxurious life youre the first person I told
good way to make some extra income!! read it!”

Yes, I KNOW that the author is clearly missing the Shift key and almost all the punctuation keys from his keyboard. What’s more I’m sure you know that an email from a total stranger that was addressed to another 19 people and which contains the phrase “youre the first person I told” is suspicious.

There was a link in the email that went to a web site calling itself "Consumer Career Trends". On that site there's a picture of a woman and a little girl walking down what looks like the gangplank of a cruise ship. She apparently is "Kelly Richards from Brooklyn, NY" and she's made a fortune from "Home Wealth Solutions", an internet-based Get Rich Quick scheme.

The web site is interesting. It pretends to be a news site but it’s actually a fake. In fact it's just a single page, nothing more that an advertisement for this scam, masquerading as a news story.

More curious is that the very same picture of “Kelly Richards” appears on several other pages, offering other schemes. She appears on the "Homestead TV Magazine" page offering "Home Online Jobs". She also appears on a page calling itself the "Gaborone JOB REPORT" offering the "Home Cash Generator".

No, of course it's nothing to do with Gaborone, that's just the web page knowing from my internet address where in the world I am. If you're in Francistown when you visit the page it will be the "Francistown JOB REPORT" site. Similarly another site she appears on calls itself the "South-East CAREER TRENDS" page, but this time she's "Kelly Richards of Gaborone, South-East". She certainly gets around.

Best of all, she also appears on the "South-East Work From Home Report" page where she appears to have assumed a new identity. There she appears as "Tanya Davis".

Before you imagine that I’ve memorised the contents of every single scam web page, I’ll confess that it’s possible to search for identical pictures across the web using a tool called TinEye. That’s the secret.

Clearly this is suspicious. All of these schemes are basically the same thing, no doubt run by the same bunch of scammers, all using the same techniques to offer money for nothing. But you don’t need to go any further than the evidence provided by the pictures. A picture, as they say, is worth a thousand words.

However you also need to be able to see through rotten arguments. Following my comments on the TVI Express pyramid scheme recently I got this email:

“I have two questions: First; in business, do you buy only a product as a consumer? Second; why did the author not mention that some members of TVI are successful? Was it deliberate or was it through ignorance? Do not criticise systems that you are not a member of. You would be more convincing if you joined TVI and became a failure. Remember, many people have invested in ‘genuine’ businesses, and have failed. Inference, therefore, every business is a scam”

Where should I begin?

In business, no, you also buy services as well as products. But with TVI Express they don't offer either. All they offer is the chance to make money from recruiting other people. That's a pyramid scheme.

Why didn't I mention "that some members of TVI are successful"? Because the ones at the top only make money by cheating other people. I criticise burglars and thieves for the same reason.

So I'm not qualified to criticise a pyramid scheme until I’ve joined it and had my money stolen? That’s just silly. I don't need to jump out of a plane without a parachute to know it's a bad idea. I don't need to burn cash to know it's a bad idea. I don't need to commit a crime and go to prison to know that it's a bad idea. I don't need to have joined the TVI Express pyramid scheme and lost money to know that it's a bad idea.

So because TVI victims lose money and so do some investors in real businesses, then all businesses are a scam?

I really hope you have nothing to do with the education of children.

This week’s stars

• Reginah from Barclays call centre for professionalism and calming an angry customer
• Koziba from Bank Gaborone for her “usual” exceptionally high standards of customer service.

TVI Express in Namibia - continuing to break the law?

It's reported that TVI Express in Namibia are flouting the Bank of Namibia's ban on them. The BoN has promised action if they don't cut it out!

Another TVI Express story in the SA Sunday Times

Following last week's story in the SA Sunday Times about TVI Express and their founder, Tarun Trikha, there was another story yesterday entitled "Promises broken, claim cops". It's worth reading.

"... an officer of the Hawks, based in Richards Bay, said he and eight of his colleagues had paid R21600 into the scheme in September - and didn't receive their vouchers or the promised financial returns.

"It was agreed that we would get R108000 in return by a TVI representative, but, up to now, we have not received a cent," said the lieutenant.

A captain at Durban Central police station said he and dozens of colleagues had been lured with "promises of quick riches". He said he had invested R21000 in October and that he and colleagues were promised a R108 000 return in eight weeks.

Remarkably similar to the story we reported here.

We get email from a TVI supporter

I got an email from someone critical of my coverage of the TVI Express pyramid scheme. I won't mention his name.

"Reference is made to an article in The Voice of Friday August 05,2011. I have two questions:
First; in business, do you buy only a product as a consumer?
Second; why did the author not mention that some members of TVI are successful? Was it deliberate or was it through ignorance?
Do not criticise systems that you are not a member of. You would be more convincing if you joined TVI and became a failure. Remember, many people have invested in "genuine" businesses, and have failed. Inference, therefore, every business is a scam.
TVI supporter."

Where should I begin?

In business, no, you also buy services as well as products. But with TVI Express they don't offer either. All they offer is the chance to make money from recruiting other people. That's a pyramid scheme.

Why didn't I mention "that some members of TVI are successful"? Because the ones at the top only make money by cheating other people. I criticise burglars and thieves for the same reason.

So I'm not qualified to criticise a pyramid scheme that I haven't joined and personally experienced? I don't need to jump out of a plane without a parachute to know it's a bad idea. I don't need to burn cash to know it's a bad idea. I don't need to commit a crime and go to prison to know that it's a bad idea. I don't need to have joined the TVI Express pyramid scheme and lost money to know that it's a bad idea.

So because TVI victims lose money and so do some investors in real businesses, then all businesses are a scam?

I do hope you have nothing to do with the education of children.

TVI - their fake "award"

When I was on the radio arguing with the TVI Express people earlier this week one of them claimed that TVI Express had been given an award by the Indonesian Government. I was skeptical and asked them who awarded it and when. They couldn't answer that.

Kasey Chang got in touch to point out that this award is not all it might seem. In fact it's another of those fake awards that you pay for, just like the ridiculous Bizz Awards scam.

Yet more evidence that TVI Express is a pyramid scheme, a scam and a tissue of lies. But we didn't really need more evidence of that, did we?

Thanks again to Kasey for the information.