Sunday 25 December 2016

World Ventures will still lose you money

World Ventures is a pyramid scheme that we've mentioned many times before.

Recently it updated its brand and started calling itself "Dream Trips" but it's still the same old thing.

World Ventures publish an "Income Disclosure Statement" every year and it makes interesting reading. Like all pyramid schemes the majority of the money is earned by a very small proportion of the people, the ones at the top of the pyramid.

The statement for the USA in 2015 can be seen here and you're welcome to analyse it for yourself. However, if you don't have a calculator to hand, here are some of the highlights.
  • Referring to their Independent Sales Representatives (“IRs”), they report that "22.24% of all IRs earned a commission or override, while 77.76% did not". In simpler terms, three quarters of all their American recruits made nothing from the scheme. Nothing at all.
  • Two thirds (actually 68.7%) of all the income is earned by the 3.7% at the top of the pyramid.
  • 84% is earned by the top 19%. To put it another way, 81% of the recruits who earn money have to share just 16% of the money.
  • If you're at the top of the pyramid you're doing well. The 1 in 14,000 people at "International Marketing Director" level earns an average of $409,280. The 1 in 20,000 described as "National Marketing Director" level have an annual income of $238,645.
  • However, of the small proportion who made some money, the average income was $1,348.82 but that's not a good indication of what the average recruit will earn because the figures are distorted by the tiny proportion at the top who earn a fortune. The median income level is a much better illustration of what you can expect to earn. That's a meagre $150 per year.
But don't forget two important things. Firstly, like I mentioned above, only a quarter of all the recruits earn anything. These figures just refer to the quarter of victims who earned anything at all. 

More importantly, these amounts refer to income, not profits. These figures are before the recruits took account of all the money they had to spend on travel, accommodation, electricity, internet access and the coffee and drink they had to buy when they did their best to recruit other victims into this scam. I suspect that most people earn less than they spend trying to make the money. They lose money.

In short, please don't waste your time, effort and money with World Ventures or Dream Trips.

Friday 23 December 2016

Next year's mistakes

I’m not psychic, I can’t see into the future but I am certain that 2017 will have more than its fair share of scams. I’m certain of it because that’s the pattern. Scams aren’t going away. In fact they’re multiplying.

Despite the lessons we should have learned over the last few years, people continue to fall for the nonsense peddled by the proponents of various Get Rich Quick schemes. You might think that with the memory of Eurextrade fresh in our minds, people would now understand that any scheme they encounter that promises to quickly make them rich is a lie, wouldn’t you? But it’s not so.

Even within days of Eurextrade collapsing the same people who had been busy recruiting other victims had moved to an identical but short-lived scheme calling itself Oil of Asia and were doing their best to recruit other to that scheme instead. Not only hadn’t they learned their lesson but they thought they could recover some of the money they’d lost by joining another scam. These were serial scam victims.

And it’s still happening. In 2016 we’ve have a series of pyramid and Ponzi schemes. As with all scams, most of them failed to gain any momentum and quickly faded away. We were lucky enough to have seen some of them in time and warn people but a few gained some traction and managed to sucker in some victims.

The year began with MMM Global, a classic Ponzi scheme formed by a convicted Russian scammer called Sergei Mavrodi. In fact, Mavrodi spent time in a Russian prison for running Ponzi schemes so you’d think that would make people think twice before handing over their cash to a man like him. Not so. Thousands of South Africans, Zimbabweans, a few of us and many, many Nigerians signed up and handed over their money hoping to earn the 100% return the scheme promised every month. However, like all such schemes it collapsed firstly in South Africa and is now, as you read this, collapsing in Nigeria, leaving many people much poorer than when they joined. Our good luck was that our market was too small for MMM Global to thrive and unlike Eurextrade, this scam wasn’t targeted specifically at Botswana.

Image of Mavrodi being escorted to prison in Russia c/o Mail & Guardian
Then came called Amazing5 that offered 5% per day for a month, a deal that, if it was true, would have more than quadrupled your money. That one didn’t last very long at all.

Then came Pipcoin, the first example we saw of a new type of scam. These are the pretend Bitcoin scams. Bitcoin is a genuine digital currency that has the potential to change the future of money but these scams are just pale imitations of Bitcoin. In the case of Pipcoin there was no actual currency, digital or not, it was nothing more than a Ponzi scheme. They claimed that a mere 35% profit per month but that wasn’t enough to persuade enough victims to hand over their money.

Pipcoin was very closely followed by its twin, Billcoin. This scam made a much more ambitious promise of 80% profit each month but this was also no more than a Ponzi scheme in which any “profits” people received were just taken from the initial contributions made by people joining after them. Billcoin still exists and there’s even a Facebook group devoted to promoting it in Botswana but I suspect it’s already about to fail very soon.

Helping Hands International came next. This was a pyramid scheme in which recruits were encouraged to recruit multiple levels of people beneath them and it was made very clear that there was “no buying of stock” and “no selling”, just the recruitment of other people. That’s the dictionary definition of a pyramid scheme.

But Helping Hands International was different. Their lies were extraordinary. For instance they claimed that their scheme was “supported” by companies such as Hyundai, Apple, HP and Lenovo but this was just a pack of lies. Companies like those don’t “support” pyramid schemes.

Then we went back to the pretend Bitcoin scams. It’s important to say again that there’s nothing inherently wrong or illegitimate about Bitcoin. It’s a real currency but it’s a really risky thing right now. It’s a real currency but it’s entirely unregulated and there are no rules to protect you if you buy and spend using Bitcoins. There’s absolutely nobody to complain to if things go wrong. Also, like any other currency, it’s value can go down as well as up and Bitcoin has crashed before.

But this time it wasn’t Bitcoin we met, it was a scheme surrounding the buying and selling of Bitcoins calling itself the Bitclub Network. Some clues about the real nature of this scheme can be found on their web site. They describe their scheme as “The most innovative and lucrative way to earn Bitcoin” and they say they have “a referral program so you can get paid for anyone you refer”. It’s a pyramid scheme, nothing more than that.

My prediction is that there will be more and more schemes like this in 2017, particularly the ones surrounding Bitcoin. They’ll exploit our ignorance and they’ll continue to target us as a country. That’s because we have a reputation for being gullible. Eurextrade showed that. That was a scam specifically targeted at us. It didn’t try to recruit people in Namibia or South Africa, it was only recruits in Botswana they wanted and our reputation hasn’t changed over the subsequent years.

My hope is that in 2017 there’ll be a miraculous surge in skepticism in Botswana and that scammers will learn that we’re no longer the gullible nation of potential victims they currently perceive.

But I suspect I’ll be disappointed.

The Voice - Consumer's Voice

Is my bank being fair?

My dad had a fixed deposit account and had an agreement of a stop order of P2,000 to the account monthly. His money was to be withdrawn at the end of the year. This was to be December 2015 but when the time came he didn’t find his monies. He had been to and fro with the bank to no avail. He was then told that a teller defrauded his account and is on suspension and they are still investigating and they will refund him shortly. To date he is being sent from pillar to post. The manager keeps giving empty promises of tomorrow never comes.

My question is who is at fault? The bank staff right? So should my dad suffer because of incompetence of a manager to conclude the matter? Why don’t they refund the customer and they will do their investigations on their own? Will they pay him interest? My father cannot really stand up for himself so he knows less of his rights. Can you assist him?

What a dreadful Christmas present for your Dad! For two years his bank has disappointed him and effectively stolen his money. Yes, I DO mean stolen. Even if the management didn’t steal the money, their member of staff did and they should stand up for their customer, the person who has done nothing wrong in this situation.

I can understand why the bank would want to conduct a thorough investigation of the situation and even to check whether your Dad was perhaps conspiring with the teller to defraud the bank. But that’s clearly not the case. It’s been a year and the police would have been round at his house by now if they had any suspicions. Lawyers will tell you that “justice delayed is justice denied” and clearly your father has been denied justice. And he’s been denied his money.

It really is unacceptable to take this long to deprive your Dad of his money. Rest assured that we’ve already contacted the MD of the bank and I suspect he’ll be getting his money very shortly.

Update: I received a message from the bank saying that they spoke to the father and his story isn't quite the same as the one the son told us. Also he hasn't responded to their invitation to discuss the issue. Maybe there's slightly more to this story than there seems?

What should I do to protect myself next year?

What lessons would you give us that can protect us against abuse in 2017?
  • Be a skeptic. Don’t believe anything anyone says to you until you have a good reason to do so. There are plenty of persuasive people out there who are doing their very best to steal your money from you. If anyone ever approaches you with a miraculous way to make money then ask yourself a simple question. How do they gain from recruiting me?
  • Never join any scheme that requires you to recruit layers of people beneath you. If you’re lucky it’ll just be a Multi-Level Marketing Scheme like Amway or Herbalife from which you will certainly make no money at all. If you’re unlucky it’ll be a pyramid scheme like World Ventures or Helping Hands International that will leave you frustrated, irritated and poorer.
  • Never join any scheme that is based on “donations”. It’ll almost certainly be a Ponzi scheme like MMM Global, Billcoin or the late and unlamented Eurextrade. Again you’ll end up embarrassed, angry and poor as a result.
  • A spending tip. Remember that what seems like the cheapest option is usually not actually the cheapest. The phone that has the cheapest purchase price probably comes with only a one or three month warranty so when it goes wrong after six months you’ll need to by another brand new phone to replace it. Spending a few hundred extra on a phone with a full warranty would have saved you lots of money.,
  • Save rather than spend. I know it’s boring but your Mum was right. It’s always better to save up for something and buy it for cash than to buy it on hire purchase. ALWAYS. You’ll thank me when you’ve done it.
Finally, enjoy Christmas and the New Year. Drive safely, eat and drink sensibly and love your friends and family like you were never going to see them again!

Saturday 17 December 2016

Evolving scams

Scams are like diseases. They very rarely disappear but occasionally there are success stories. Smallpox has been completely eradicated and with luck in the near future polio and malaria will disappear as well. We’re not doing as well with scams.

There are still people receiving the traditional “419” scam which usually starts with a plea for assistance from a young woman in West Africa who tells a sad story about being orphaned and alone, sometimes in a refugee camp, but who has a massive inheritance in a bank account in another country and that she needs assistance in liberating that money. In return for that help the victim is offered a share of the supposed fortune.

Of course, none of this is true. There is no fortune, there isn’t even an orphaned girl. It’s all about the money the scammers sending the emails will eventually demand from the victim. After announcing that there’s some fee to be paid to facilitate the payment, they’ll raise the pressure on the victim until they pay up, then demanding further payments until either the victim realises they’re being scammed or they simply run out of money.

Most of us know about these scams now but not all of us. That’s why the emails are still being sent and gullible victims are still handing over their money.

But why do people fall for it? In particular why do they fall for the ridiculous story about the fortune in the bank?

Cormac Herley, a researcher employed by Microsoft, wrote a paper in 2012 (link to pdf document) entitled “Why do Nigerian scammers say they are from Nigeria?” that examined these scams. He wrote:
“An email with tales of fabulous amounts of money and West African corruption will strike all but the most gullible as bizarre. It will be recognized and ignored by anyone who has been using the Internet long enough to have seen it several times. It will be figured out by anyone savvy enough to use a search engine […] It won’t be pursued by anyone who consults sensible family or friends, or who reads any of the advice banks and money transfer agencies make available.”
Given that the scammers send these ridiculous emails to thousands, perhaps even millions of potential victims, how can they ensure that the ones who respond are most likely to be the ones who will end up coughing up their cash? You might think that they could do this best by constructing a story that is believable as possible but that’s not correct. If they did that, Herley’s research shows, the scammers would have to manage an enormous number of responses. Most of the less gullible people would eventually realise that there was something suspicious going on.

In fact, the best way to maximise their successful response rate, to get the highest proportion of victims to cough up cash, is to make the story as stupid as possible. If they do that, then only the MOST gullible people will respond. The people likely to respond to those emails are the ones worth the scammer’s time. Make the first email as stupid as possible and the victims will select themselves.

As Herley said:
“The initial email is effectively the attacker’s classifier: it determines who responds, and thus who the scammer attacks (i.e., enters into email conversation with). The goal of the email is not so much to attract viable users as to repel the non-viable ones, who greatly outnumber them.”
It’s very easy to think that these scams don’t happen any more, that scammers have moved on to other ways of parting the gullible minority from their money. This is true to an extent, scammers have evolved, they’ve moved into recruitment and immigration scams, they’ve set up fake educational establishments, they’ve broadened their portfolio in the same way any successful business would. But they haven’t abandoned their roots, their core business remains the same, mainly because it can be so horribly profitable for them if they get it right.

The problem is that the organized crime organizations behind these scams are smart. They know that despite the few remaining gullible victims more and more of us are aware how these things work. So they’ve been forced to evolve. It’s therefore no surprise that the biggest risks these days are pyramid and Ponzi schemes.

We’ve warned people repeatedly about recent scams such as MMM Global, Helping Hands International, Monitec Society and the variety of schemes pretending to have some connection to the Bitcoin digital currency. Scams like Billcoin and Bitclub Network are actively trying to recruit people right now as you read this.

But there’s a constant stream of new scams emerging. Just days ago someone alerted us to another calling itself Cryptowealth. Their web site says that the scheme is
“the worlds first fully automated rotating donation social network marketing plan taking members into two platforms earning millions with only a once-off starting donation of $25 and four referrals”
You can see the clues there. Phrases like “rotating donation” suggests a Ponzi scheme and “four referrals” suggests a pyramid scheme. And it’s not $25 to join here in Botswana. Here they want more, P500 to be precise.

But do they even try to explain how they make new money? How you can make money if you’re gullible enough to pay your P500 to join? This is as close as they get:
"Unfortunately, the world is full of “parasites” who live off the ideas of other people. For that reason, the real method of how all will work will be held back".
Is it necessary for me to warn people about this? Cryptowealth is a scam and anyone foolish enough to pay to join it with hopes of making money from it will be sadly disappointed. And poorer.

We all need to keep ourselves thoroughly educated and aware of the risks posed by scams like Cryptowealth. It’s then the job of all of us to spread the word to the people we care about.

The Voice - Consumer's Voice

Can I get a longer warranty?

Please advise me. I bought a machine from a shop in Gaborone, it has 2 months guarantee but within the 1st month the machine started having problems and was not working as it should be. I took it back to them and they worked on it, it is now working,

However I would prefer having my money back as I don’t trust it any more but they refused saying it is now working perfectly. My worry is that, they still insist that, the guarantee is only 2 months, I would like it to have at least 6 months guarantee or 1 year. I feel in 2 months maybe it will be worn out and I will have lost my money.

What do I do?

Unfortunately, I’m not sure there’s much you can do. From what you said, there’s no suggestion that the store lied to you about the length of the warranty. It sounds like they told you from the beginning that the machine only came with the two-month warranty.

The bad news is that you accepted that. You don’t have a right to go back to a store and demand that they change the conditions of the sale you agreed to. It would be like going back to a car dealer and demanding that they give the car more power or change its colour. It seems that you accepted the two-month warranty and there’s nothing you can do to change that. It would only be if they deceived you somehow that you would have a right to change the deal. Put simply, you don’t have the power to force them to offer a decent warranty. You don’t have a right to force them to offer good service or to be a better business.

There are two lessons here. Firstly, the cheapest choice isn’t usually the cheapest thing to buy. The price of the cheapest item might be lower but the overall “cost of ownership” is often a lot higher because an item that comes with a warranty of only two month isn’t going to last long. If, like yours, it goes wrong after a few months you’re going to need to buy a replacement.

The other lesson is that you can judge the quality of an item by the length of the warranty you’re offered. For instance, a car that comes with a 5-year warranty is a better car than one that comes with a three-year warranty and a whole lot better than one with a one-year warranty. An item that has a two-month warranty is going to be rubbish.

Don’t buy from stores that play games with warranties.

Is Cryptowealth genuine?

Is this Cryptowealth a genuine company? Someone says you join with P500 and you get 4 people to join and they too get 4 people and make a chain for themselves until they make profit, isn't this one of the pyramid schemes?

Cryptowealth is a scam, there’s no doubt about it. It’s another Ponzi scheme like MMM Global or Helping Hands International. All the clues are there.

Their web site describes their scheme as “the worlds first fully automated rotating donation social network marketing plan taking members into two platforms earning millions with only a once-off starting donation of $25 and four referrals” and that’s the first clue. Any scheme that promises rapid wealth (“earning millions”) is being misleading. Only lotteries can offer you instant wealth and the odds of winning a lottery are so close to zero that you shouldn’t waste your time.

The next clue is that scams are always hesitant about where new money comes from. Are they investing in stocks and shares? Foreign currencies? Gold, diamonds or rare metals? Are they gambling the money on horse races? Cryptowealth are openly secretive. They say “the real method of how all will work will be held back” because “the world is full of parasites who live off the ideas of other people”. They’re hiding something.

Cryptowealth has all the signs of being a Ponzi scheme in which the small returns that are paid to recruits are taken from people who join later. The money they get comes only from other members of the group. The only growth comes from new members, not from any actual investment return. Like all Ponzi schemes Cryptowealth will collapse once it can’t find any new recruits or the existing ones realize the mistake they’ve made.

Please don’t waste your time, money and effort on yet another scam.

Sunday 11 December 2016

Facebook rules

I’ve been resisting it for years but the time has come to lay down a code of conduct for our Facebook group. My hesitation in defining these rules has partially been because I’d hoped that all members of the group would somehow just know how to conduct themselves. The vast majority of them do, but a few seem not to have realised how it’s meant to work. That’s my fault for not making it clear. Mea culpa.

Let’s start with one of the basics. Naming people.

Please don’t name individuals when you post a complaint. I have no problems at all with you naming a company, store or supplier, but don’t name the specific employee that offended or mistreated you. The reason is simple. In almost all cases they don’t have a right of reply. That might be because they’re not on Facebook or it might because they are but they haven’t joined our group but it’s more likely that their employer doesn’t permit them to comment in their personal capacity. That’s actually a reasonable rule. If you’re the MD or CEO of a company do you really want your employees posting on your company’s behalf? How will you control what they say? How will you keep them “on message”? How will you prevent them posting something inappropriate while drunk in a bar on a Friday night? How will you prevent them saying what they really think about their customers, colleagues or you, their boss? Most companies decide it’s simpler not to permit staff to say anything on Facebook about their work. They’re free to comment on football, Kardashian posteriors and the weather, just not work.

Some companies go even further and refuse to engage with Facebook altogether. Obviously that’s their decision but I think it’s a bit like not engaging with the telephone network. Whether you like it or not, it’s there and it’s not going anywhere. Those companies need to get with it and join the 21st century.

So don’t name specific individuals, it’s just not fair.

Meanwhile feel free to name people if you’re celebrating them. If you have a good news story to tell then feel free to name the person who delighted you. Even post their picture as well if you like. Celebrations are very different from complaints. They should be public so we can all learn who the service stars are and where they work.

Don’t post advertisements. None. Not even one. I don’t care how good you think the product is, don’t advertise it. Just don’t. There are plenty of very good Facebook groups devoted to advertising, buying and selling things but ours isn’t one of them. All advertisements will be deleted and a polite message sent to the person who posted it asking them not to do it again. If they later post another they’re gone from the group, simple as that.

The same goes for irrelevant material. Silly jokes, pictures and links to news stories that have nothing to do with consumer issues are banned. The same rule applies. Two strikes and you’re out.

Then there are the offensive posts. Of the more than 45,000 people currently in the group, the overwhelming majority are easy-going, tolerant and peaceful. They’re good neighbours. They get excitable sometimes but their hearts are in the right place. However, as hard as we try to prevent it, occasionally someone different slips through the net. Like the one who used “the k word” to describe people of a darker skin tone than hers. Like the one who wanted a particular minority group killed. Like all the people who have made sweeping generalizations about our Indian, Pakistani or Chinese neighbours.

I can’t police what’s in your head but I WILL judge you by what you write in our Facebook group. Hate speech will be deleted and you will be expelled and banned from ever returning. So if you have racist, bigoted or otherwise toxic views, keep them inside your head and out of our group.

Finally, there’s no space in the group for people trying to sell scams. Despite the nature of the group and its content we’ve often had people actively trying to recruit people into pyramid schemes like World Ventures (and their descendent, Dream Trips) and Ponzi schemes like Eurextrade. That’s simply unacceptable.

What’s more complicated is when people are more subtle. Recently someone was posting regular comments about Bitcoin, the fascinating new “cryptocurrency”. While I’ve no problem with people discussing Bitcoin, or even promoting it, what I object to is people exploiting the widespread public ignorance about it for their own gain. The person posting comments on Bitcoin, who suggested that people should “invest” in it, actually had another agenda. She was doing her best to promote a pyramid scheme called Bitclub Network which its proponents describe as "The most innovative and lucrative way to earn Bitcoin", suggesting that getting involved in “Bitcoin mining” is a way to make money. They also say that "With BitClub Network you earn daily profits from our shared mining pools. We also have a referral program so you can get paid for anyone you refer."

Bitclub Network is nothing more than a mixture of Ponzi scheme with pyramid elements.

While Bitcoin and the technology it uses are fascinating, it's no more than a new currency. It's not an investment scheme and if anyone tells you otherwise and encourages you to start buying Bitcoins or to join a scheme like Bitclub Network, saying you can make lots of money, ask yourself this simple question. How do they benefit from me joining?

So that sort of thing isn’t permitted in the Facebook group either.

If you haven’t joined our group yet, please do. It’s full of interesting, caring people who do their best to help one another. Just play by the rules, OK?

The Voice - Consumer's Voice

Can the job be real?

I saw an advertisement on Facebook that said I could stand a chance of being selected at random to go for training and work for a website. They said that no experience and qualification was need and that we just must be fluent in Setswana or English. The advertisement said that after training they would pay salaries of P7,000 per month and also bonuses and allowances. They said that only 16 lucky followers will be selected for training.

Can this be true?

I’m very sceptical about this. Firstly, real companies don’t recruit people at random like this. Real companies also don’t recruit people based who have “no experience and qualification”. Yes, of course come companies like to recruit people who are new and who can be trained but they only do that once they’ve been thoroughly assessed.

The post gives a web site for what they suggest is an online newspaper but that the web site doesn’t actually exist. I also disapprove of the way they’re undertaking this supposed recruitment exercise. They say that to be selected for training recruits must follow several steps. Firstly, you must like their Facebook page, then like the post advertising the supposed recruitment, then tag at least six friends and then (and they say this is very important) share the post in six other Facebook groups.

I suspect that these people are spamming Facebook with garbage in the hope of popularizing their so-called news site. There might be nothing more to this than that.

We all need to be very careful with any advertisements for jobs that we see online. This one is irritating but harmless but many others are the beginning of advance fee scams. They’ll claim they’re finding you a job in a far-flung, exotic location with an amazing salary and astounding benefits but in fact there’s no such job at all. Just before you think you’re finally getting the job they’ll spring a surprise on you, a legal or visa fee that you’ll have to pay them or one of their associates in order to get the job. That’s the “advance fee” they’re seeking.

Remember to be careful, particularly when something seems too good to be true. It always is.

Can I get my laptop fixed?

I need your advice. Ever since I bought my laptop at a store in Riverwalk last year September it has been giving me sound problems. It had a year warranty and I took it back 3 times to have it fixed within the year long warranty period. They said they only exchange if its to be fixed for the 4th the thing is the same sound problems have started again but now the warranty period is over. It seems like my laptop is still having the same problem it always had from the beginning. Should i take it back again or give up coz my warranty is over?

No, you must NOT give up. Clearly this laptop has a major problem. You should tolerate a problem like this once but three times is going too far. Also the store’s excuse about only exchanging it if it goes wrong four times is just silly. There is obviously a problem that they can’t fix and the time has come to offer you a replacement laptop.

This is an area where we’re lagging behind other countries. In 2015 the UK updated their consumer protection laws to guarantee a right to completely reject an item and get a complete refund if it fails within the first 30 days. After 30 days you have to give the retailer one chance to either repair or replace the item but after that you can insist on either a repair or a replacement.

Their new laws have had a dramatic effect on the way stores in the UK treat their customers. Don’t you think we deserve the same level of protection?

I know that in your case the warranty period has expired but I still think the store has a moral obligation to help you somehow. They’ve had three opportunities to fix the thing and have failed each time. That’s simply not good enough. We’ve already contacted the store manager and he’s promised to look into your situation. I suspect they’ll do the decent thing.

Saturday 3 December 2016

Bitcoin abuse

Bitcoin. That's been the big issue for us in the last couple of weeks. Many people have been in touch asking is it a scam? Should they get involved? Is it risky?

The answers to those questions are No, Maybe and Yes, in that order.

So let’s start at the beginning. What is Bitcoin?

That's a simple question to answer but perhaps hard to understand. Bitcoin is a currency, but not like any currency we've known before. There are no coins or notes with Bitcoin, no bits of metal or paper. There’s nothing you can put in your wallet or purse. It exists purely in cyberspace. It's a digital currency, sometimes called a virtual currency or maybe a cryptocurrency.

And that confuses people. What confuses them more is the technology behind Bitcoin. Terms like "blockchain", "distributed ledger" and "Bitcoin mining" are hard to understand unless you're an expert. There's also the simple confusion that your money is "out there" somewhere and not in your pocket. That's odd.

In fact the "out there" element is very new and innovative. The blockchain, which is a database of Bitcoin transactions that records and confirms every transaction ever performed between people using Bitcoin, is hosted all over the world, not in one place. The so-called Data Miners who run the computers on which the Blockchain is hosted can themselves earn Bitcoins by holding and verifying the transactions and that's all revolutionary.

Bitcoin mining farm in Iceland. Image c/o Wikipedia
However, it's important to know that the computing power required to be a profitable data miner is way beyond individuals like you and me and can only really be achieved by "mining farms" with enormous processing power and energy consumption.

Another key thing about Bitcoin is that it’s encypted and it’s currently extremely hard for banking and intelligence agencies to track the payments that are made using Bitcoin. They can't see that you're buying your kid's Christmas presents or a plane ticket with it, just like they can’t see that your neighbor is using it on the Dark web to buy drugs, guns or child pornography. That scares law enforcement agencies around the world.

Despite all these complicated issues I'm fairly certain that Bitcoin, or something like it, might be the future of money. Many of us already use international online payment systems such as Paypal and Apple Pay and local money transfer services like eWallet, MyZaka and Orange Money but they're all based on a currency that we know. Bitcoin is a step further. Not only is it an online payment mechanism but it's its own currency.

Bitcoin is real. It's legitimate. It's not a scam. But it's still highly risky.

Bitcoin is still so new that even financial experts have no idea of what it's future will be. Some are already saying its days may be numbered. What's more, and despite what some proponents are saying, its value can easily go down as well as up. If you bought Bitcoins in November 2013 you would have lost 78% of your "investment" by January 2015. Even today you would still be down by 24%. Before anyone criticizes me for using those figures I admit I chose the highest and lowest values but my point is that it's volatile. All currencies are volatile but Bitcoin is clearly even more volatile than most others.

Source: CoinDesk
Then there are security concerns. As we understand it now, the technology underpinning Bitcoin is highly secure but anyone who says that a particular security protocol is foolproof hasn't read their history books. All security technologies will be cracked or hacked sooner or later and if a flaw is ever discovered in Bitcoin's security mechanisms it would be instantly worthless. Say bye-bye to your money.

The fact that it’s completely unregulated is another concern. If a conventional currency like the Pula, US dollar or Euro showed signs of failing, central banks would do something to support it. We've seen that happen before in various countries. But with Bitcoin, there's nobody to help you.

Also, when you spend Bitcoins there are fewer payment protection mechanisms available to you. There are no rights to refunds and no chargeback mechanisms. In December 2013 the European Banking Authority warned consumers that "No specific regulatory protections exist that would cover you for losses if a platform that exchanges or holds your virtual currencies fails or goes out of business."

I'm not saying that Bitcoin is a bad thing but it's risky and before anyone buys Bitcoins they need to remember that they should only ever invest speculatively with spare money, money they can afford to lose. Do not buy Bitcoins with the money you need to pay your home loan, rent, food bills or school fees.

Then there are the scams.

Because so few of us know much about Bitcoin we can easily be suckered by scammers trying to exploit is. Ponzi and pyramid schemes like MMM Global, Billcoin, Onecoin and Pipcoin have all pretended either to use Bitcoin or to be something like it but it's all been lies, designed to cheat you.

There are also schemes that are based on Bitcoin but are using scammer's tricks to get your money.

The Bitclub Network is a good example. They describe themselves as "The most innovative and lucrative way to earn Bitcoin" and they suggest that Bitcoin mining (see the explanation above) is a way to make money.

They go on to say that:
"With BitClub Network you earn daily profits from our shared mining pools. We also have a referral program so you can get paid for anyone you refer."
In fact, Bitclub Network is a Ponzi scheme with pyramid elements.

Bitcoin and the technology it uses are fascinating. However, it's no more than a currency, it's not an investment scheme. If anyone tells you otherwise and encourages you to start buying Bitcoins or to join a scheme like Bitclub Network, saying you can make lots of money, ask yourself this simple question. How do they benefit from me joining?

The chances are that they're trying to make money from you, not promote the future of money.

Friday 2 December 2016

The Voice - Consumer's Voice

Did they steal my phone?

So I took a phone to a cell repair shop in African mall to fix the on button, when I returned to collect it they tell me that the shop got robbed along with my phone but there is no police report and I have been reliably informed that they sold it at another shop in the main mall. I'm not some maverick vigilante so I would just like my things to get sorted out asap. I still have the receipt so what would be the quickest and best way to get my grievance sorted, it's been two weeks with these guys not telling me anything concrete. I have been advised by a friend to go to consumer affairs or something at a local police station.

I’m glad you’re not a vigilante because vigilantes, in fact anyone who takes the law in to their own hands, isn’t a vigilante, they’re a criminal. The law is there to protect us but in most cases the people empowered to enforce the law are those employed by legitimate law enforcement agencies such as the Police, DCEC and DIS. Other entities such as BURS, Bureau of Standards and Bank of Botswana have certain legal powers but that’s usually limited to writing angry letters, not kicking down doors, having car chases and handcuffing people.

Incidentally, there are certain exceptions. Both you and I have the legal power to detain someone if we feel they’ve committed a serious criminal offence but that’s all we can do. We can defend ourselves if they turn violent but we don’t have the right to beat them up and we certainly don’t have the right even to search them. Only our brothers and sisters in blue can do that. No, before you ask security guards don’t have special powers.

So, no, you mustn’t go all vigilante on them, instead you should go to the Police. Forget Consumer Affairs for now, go to the Police and say that you think the store has either stolen the items, colluded in them being stolen or is covering up a theft. Either way they need to explain themselves and the best people to make them do that are the people who CAN search their premises and who can apply the right level of “persuasion to the owners and managers of the store.

And before you ask, no I don’t wish I had that sort of power. It would be messy. A small but significant number of business people would very quickly be enjoying the hospitality of the nice people in the Department of Prisons.

Where’s my refund?

I kindly request your advice. I made a lay bye at a shop at Airport junction of P1000 cash on the 10th October. The condition on the receipt is 25% handling fee will be charged upon cancellation of Lay-bye.

On the 21st November I went to the shop to cancel the lay-bye, I was told the refund will be deposited in my account, the shop does not do refunds on cash only EFT. Since then I have not got my refund. I called the shop today I was told the Accountant is in South Africa and he is sick and as such I will not be getting my refund this week.

I asked to speak to the owner of the shop, he was very rude, upon expressing to him how unhappy I am that I have to be punished to cancel lay bye, I paid cash now I have to be sent from pillar to post to get my refund, they can’t even ascertain me of the date I will receive the refund. I asked where is stipulated that condition of refunds is done only via EFT, he told me he does not owe anyone condition of how he runs his shop. I have bought before at this shop and to get this treatment especially from the so called owner I feel my rights as a consumer were violated.

Let’s be fair. You sent your email to me on 25th November, only four days after you told the store you wanted to cancel the lay-bye. I’m not defending the alleged rudeness of the store owner but it was only four days after you tried to cancel the deal that you complained. I can’t say whether the story they told you about the accountant being sick is true or not but is there any reason not to believe it? Let’s be generous and assume it’s true.

As for their suggestion that the refund must be made by bank transfer, that’s normal practice with stores. Regardless of how you pay for the item, they don’t want to deal with cash. Cash is an expensive thing to manage and it’s also very, very risky. To get cash to and from the store and their bank requires a safe, secure transport and very careful, manual processes. The opportunities for crime, both inside the company and outside, are immense. It’s almost 2017 and cash is not something that many organizations want to handle.

Nevertheless, this company’s owner obviously has a very poor understanding of how to deal with customers but I think you should give them a few days longer to fix your situation. If, by the time you read this, it’s not sorted, let me know. Then we can get rough!