Investor beware as pyramid schemes make comeback
Kenyan investors have been urged to be on the lookout for investment deals promising high returns in a relatively short period of time.
Regulatory agencies have warned over the reemergence of pyramid schemes that promise high returns only to disappear with one’s hard earned money.
In a notice in the dailies, the Central Bank of Kenya (CBK) and the Sacco Society Regulatory Authority (SASRA) said unlicensed deposit taking institutions had been fleecing Kenyans.
“The central bank of Kenya and the Sacco Societies Regulatory Authority wish to draw the attention of members of the public to the re-emergence of unlicensed deposit taking entities and ponzi/pyramid schemes,” the regulators said in a joint statement.
Pyramid schemes usually offer returns of between 30 and 100 percent of money deposited, usually sparking huge interest from the unsuspecting public.
Pyramid schemes usually operate an elaborate fraud scheme, paying current investors using money collected from investors joining the scheme hence its un-sustainability.
The warning by the CBK and SASRA comes in the wake of media reports of entities purporting to be deposit taking saccos disappearing with investors’ money.
“CBK and SASRA are the sole licensing authorities for deposit taking institutions in Kenya,” the regulators said urging Kenyans to exercise caution when depositing money.
However there appears to be a grey area with non deposit taking cooperative societies that are under the commissioner for cooperative development passing themselves off as deposit taking institutions.
According to CBK and SASRA, while some offer credit facilities, they are not authorized to take withdrawable deposits.
The two regulators have advised members of the public not to put their money in unlicensed entities or risk losing their money.
Get rich quick scams are not new to Kenya after a number of pyramid schemes closed down in the early 2000’s, going with millions of shillings from unsuspecting Kenyans, hoping to make a quick buck.
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