New laws are coming to give consumer protection against pyramid-type schemes

Barbados’ Fair Trading Commission (FTC) is warning nationals about illegal pyramid schemes, urging them to avoid these money making operations.

The FTC is taking the fight to pyramids, advising that new laws are coming to give consumer protection authorities the teeth to prosecute owners or promoters of pyramid-type schemes, who are suspected of defrauding “investors” out of their hard-earned money.

Dava Leslie-Ward, FTC director of consumer protection, indicated that the commission is getting tough on these operations, acknowledging that the existing legislation does not allow her department to make offenders pay because of a loophole in the Consumer Protection Act as it relates to such schemes.

Leslie-Ward advised that her department would soon be able to have proposed amendments to the Act in place soon.

She told Barbados Today that, “if you look at how our pyramid scheme is constructed… what the legislation would have been looking for at that time [when enacted] was where persons might have a good or service that they are offering; and in addition to the good and service, you have to be recruiting persons in order to make money. So you needed to have both elements there. That is under our legislation”.

The consumer protection official added: “In order for an offence to be constituted, you had to have both. Based on what we have now, it would not qualify as a pyramid scheme under the Consumer Protection Act, because these people are not selling any additional goods or services; and our legislation says you must have the goods and service and the recruitment element.”

Challenges faced by FTC in helping victims

The FTC director said her department realised the challenge it faced in being able to help victims recoup any money lost through these schemes, adding that officials had to do the next best thing and embark on a campaign to warn Barbadians against investing in them.

Explaining that she has not seen so many pyramid schemes in Barbados before, Leslie-Ward suggested that it may be a sign of the difficult economic times being experienced by people, particularly where the COVID-19 pandemic has taken many jobs or reduced the spending power in some families.

While dismissing the notion that a pyramid scheme is like a “meeting turn,” the consumer protection advocate warned that the owners and scheme promoters are the ones who benefit most but those at the bottom are usually left empty-handed.

She cautioned Barbadians to be wary of certain online marketplaces or investment opportunities, which are being disguised, but are in fact pyramid schemes, noting that the scammers are becoming more crafty and are using these tactics to get consumers to divorce themselves of their hard-earned money.

NO CASES OF ANYONE LOSING MONEY

Leslie-Ward told Barbados Today that her department has even had to turn down people who applied for approval to operate “meeting turns” when they were really pyramid undertakings. She said while there are no cases at the moment of anyone losing money, there have been many complaints from people criticising the department for seeking to regulate these schemes.

Leslie-Ward made the point that, while the Consumer Protection Department may not have the full legislative backing to prosecute at this time, the Financial Crimes Division of the Royal Barbados Police Force has made it clear that all it needs is a formal complaint.