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Office of Competition and Consumer Protection

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Alternative "investments" and pyramid schemes. Watch out - fraud

< previous | next > 20.12.2017

Alternative "investments" and pyramid schemes. Watch out - fraud
  • The President of the UOKiK warns: watch out for frauds and alternative “investments” which can use the model of pyramid schemes.
  • The can tempt you with “investments” in gold, diamonds, land, waste, cryptocurrencies, provision of advertisements, collector’s items such as, for instance, alcohol or watches.
  • Watch out for offers promising a large and quick profit – you will not make but lose money, you will fall into debt.

On the Internet, including the social media, in other media, and the so-called “events”, often with the participation of celebrities, we are flooded with ever more aggressive marketing containing promises of easy, quick and high profit. Slogans that often appear in them, for instance: “make money from home”, “Mrs. X used to be a cleaning lady, now she makes millions”, “Family Y has no more space at home to keep money” are usually attempts to talk us into risky investments in cryptocurrencies, gold, diamonds, various collector’s items or other alternative “investments”, which are often frauds or pyramid schemes.

Pyramid schemes are illegal. You will not profit from them because your money goes to the originators of the project, it is not invested. You really don’t know what is going on with your money. Sooner or later the system will stop working. You will lose. The originators promise “profits” from investments in diamonds or gold which they may not possess or in phenomena invented by themselves, which also do not exist. We are warning you: it is highly probable that such “investment” is a fraud and you will lose money that you put in.

– Watch out for offers of quick and easy profit in exchange for buying “coupons”, “investment packets”, “certificates of investment”, cryptocurrency, etc. Such promises can be found only in advertisements. Stay alert when someone promises you money for convincing other people. This can be a pyramid scheme. We notify the law enforcement authorities and conduct proceedings in cases where we suspect that consumers may be losing money – says Marek Niechciał, the President of the UOKiK.

The President of the UOKiK conducts proceedings in connection with the activities of the following entities:

1.    FutureNet, FutureAdPro on the Marshall Islands – these are portals which offer advertising packages in return for a fee. According to the information found on the company’s website you must buy a package and convince other people to participate. In the letter of the Polish Financial Supervision Authority (KNF) of 13.02.2017 we received a signal about the functioning of a system called FutureAdPro, which may mislead consumers and constitute an unfair market practice by establishing and running a pyramid-type promotional system.

On 28.06.2017 the President of the UOKiK informed the prosecutor’s office about the possible commitment of a crime. The proceedings in the case are being conducted by the District Prosecutor’s Office in Wrocław (case file ref. No. PO 2 Ds. 63.2016).

2.    Netleaders, CL Singapore in Singapore – companies that invite you to make investments consisting in the purchase of licenses to generate DasCoin. They promise quick profits. They also talk people who invested in DasCoin into talking other people into the scheme so that they can earn money. The DasCoin cryptocurrency does not exist, the originators are only promising to start “mining” it. Nobody really knows what DasCoin is, which means that consumers are contributing money to something that does not exist.

On 13.02.2017 the Polish Financial Supervision Authority informed UOKiK that DasCoin may mislead consumers and constitute an unfair market practice by establishing and running a pyramid-type promotional system.

On 28.06.2017 the President of the UOKiK informed the prosecutor’s office about the possible commitment of a crime. The proceedings in the case are being conducted by the District Prosecutor’s Office in Warsaw (case file ref. No. PO 5 Ds. 33.2017).

3.    One Life Network from Belize - invites customers to buy OneLife or OneAcademy “educational packages”, offering economic benefits in exchange for persuading others to join the scheme.

On 31.10.2017 the President of the UOKiK informed the District Prosecutor’s Office in Warsaw about the possible commitment of a crime.

4.    Mart Diamonds in Warsaw – company offering investments in diamonds. Tied to the Proventus Herman i Wspólnicy Financial Group and Prevalue Cooperative Owners.

On 11.12.2017 the President of the UOKiK informed the Regional Prosecutor’s Office Warsaw Śródmieście Północ about the possible commitment of a crime. The Prosecutor’s Office is conducting proceedings in the case of Prevalue and Mart Diamonds (case file ref. No. PR 3 Ds. 1630.2016.VI).

5.    Proventus Herman i Wspólnicy Financial Group in Katowice – offers consumers investments in diamonds, runs campaigns to acquire customers for other entities. On 11.12.2017 the President of the UOKiK informed the Regional Prosecutor’s Office Warsaw Śródmieście Północ about the possible commitment of a crime.

6.    Prevalue Cooperative Owners Spółdzielnia Właścicieli Majątku in Warsaw - according to the information found on the website the Cooperative offers “Club Membership Bonuses - calculated on the club’s turnover ensuing from intermediation in offering recommended products and shares.”

On 11.12.2017 the President of the UOKiK informed the Regional Prosecutor’s Office Warsaw Śródmieście Północ about the possible commitment of a crime. The Prosecutor’s Office is conducting proceedings in the case of Prevalue and Mart Diamonds (case file ref. No. PR 3 Ds. 1630.2016.VI).

7.    Berkeley Foundation in Łódź – operates on the basis of the so-called “e-mail chain” - you are asked to make a donation to that foundation and you recommend it to others, and then you become its “protegee”. The foundation promises
a remuneration if you convince others to donate money.

On 22.06.2017 the President of the UOKiK received information, among others, from the Polish Financial Supervision Authority that there is a suspicion that the operations of this foundation may violate consumers’ interests or constitute an unfair market practice.

8.    Questra Holding Inc. in the British Virgin Islands, Questra World Global S.L. in Spain, Atlantic Global Asset Management in the Republic of Cape Verde – offers customers investment packages, promises high profits and possibility to “make money” on selling companies and inviting others.

The President of the UOKiK received signals concerning the operations of those entities from the Polish Financial Supervision Authority in the letters of 22.02.2017 and 11.05.2017, in which it was pointed out that they may constitute elements of a single undertaking bearing the features of a pyramid scheme.

9.    Gold I Global Online Limited based in London – pursues a business activity as Global InterGold. It offers investment gold and benefits in return for inviting others into the scheme or for promoting it.

10. Goldsaver – offers investment gold for very small contributions, while encouraging to keep it at low cost.  On 05.12.2016 the President of the UOKiK informed the prosecutor’s office about the possible commitment of a crime. The proceedings in the case are being conducted by the District Prosecutor’s Office in Wrocław (case file ref. No. PO II Ds. 32.2017).

11. Lyoness – offers economic benefits which depend on entering others into the programme. Before that the participant pays in advances towards the purchase of coupons or gift cards or makes purchase at the trade partners.

12. UOKiK is also looking at the activities of the persons who are promoting, among other things, in the Internet and social media, pyramid schemes, as well as investments in cryptocurrencies, advertising packages or other alternative “investments”.

Proceedings being conducted by the law enforcement authorities and the President of the UOKiK may end in criminal charges or decisions concerning the violation of collective interests of consumers, in particular, in case of a suspicion that a pyramid-type promotional system prohibited by the Polish law is being used.

The President of the UOKiK also issued a decision concerning the Recyclix pyramid scheme which offered participation in “waste management”. The proceedings against Recyclix were commenced in May 2017. In order to join the systemthe customer had to buy at least 100 kg of waste from Recyclix which the company was supposed to send for recycling and to distribute the profit among the consumers. Recyclix also offered money for encouraging others to participate in the transaction. The proceedings concerning Recyclix are being conducted by the District Prosecutor’s Office in Warsaw (case file ref. No. PO III Ds. 23.2017). 

How to recognize a pyramid scheme

The pyramid scheme operates in the following manner: you pay in money and recommend others, for which you receive remuneration if they join in. It comes from the contributions of the persons which you recommended directly and which further recommended others. By doing so you and the persons which you recommended are financing the pyramid. However, after a certain period of time the system collapses since the funds that you contribute are not invested in any assets and do not yield any profits. They are paid to persons higher up in the pyramid. The system works as long as more money is paid in than paid out but in order for this to happen the number of people participating in the pyramid must be growing continuously and rapidly – and this is not possible. Your money vanishes. Contact with the owners stops. You lose. Pyramid-type systems are hidden under the slogans “programme”, “investments”, “making money on the Internet”, “work from home”, “advertising platform”. Report the fraud to law enforcement authorities (police, prosecutor’s office).

Cryptocurrencies

UOKiK would like to remind you that announcements concerning the risk associated with virtual “currencies” were issued by: National Bank of Poland and Polish Financial Supervision Authority and the Inspector General of Financial Information. Various risks associated with the use of “virtual currencies” were pointed out in them, including, among other things:

  • risk associated with the possible loss of funds due to virtual theft,
  • risk associated with lack of guarantee (lack of guarantee of the Bank Guarantee Fund),
  • risk associated with lack of common acceptability,
  • risk associated with possible fraud,
  • risk associated with large change of price,
  • risk of being used in criminal activities, among other things, in money laundering.

Very many business models are being created which are based on an ever greater popularity of cryptocurrencies. They use them to create frauds, pyramid schemes and other unfair systems.

Due to a huge increase in the value of the most popular cryptocurrencies, various alternative investments attract people without appropriate knowledge and experience in investing. For that reason they may become victims of swindlers who use their lack of knowledge, naiveness and belief in a quick profit.

Despite of the warnings of different institutions alternative investments are still popular among consumers. This is also affected by the fact that events which promote them are authenticated by known persons, for instance, the “Crypto Mission” broadly covered by the media, which accumulated more than one thousand people. In effect, the consumer is not attentive and cautious enough and is attracted by this type of alternative investments.

That is why we are warning you: use of the business models described by us is associated with a huge risk. Don’t take a hasty decision. You can lose money or even fall into debt.

Dear consumer, watch out when someone:

  • guarantees exceptional profits in a short time,
  • generally and obscurely presents his business, explains that he recently started it,
  • avoids answering to your specific questions,
  • uses sublime expressions (“become a partner”, “change your life”),
  • offers you coupons, investment packages, certificates of participation,
  • refers you to a website that contains vague information or is “under construction”,
  • refers you to a website which has no Polish language version (but is available, among other things, in Ukrainian, Vietnamese or Indonesian language), the registered office is located in an exotic country,
  • indicates that an important element of participating and receiving the remuneration is encouraging others to participate in the scheme,
  • does not provide the sources of financing the system or presents them in a very vague manner.

Report the fraud to law enforcement authorities (police, prosecutor’s office).

Additional information for the media:

UOKiK Press Office 
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: 695 902 088
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]

Twitter: @UOKiKgovPL

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