The National Consumer Commission (NCC) has confirmed that it received its first complaint against Crowd1.
The NCC will now investigate the business to determine if there are grounds to launch a formal investigation.
Should the investigation reveal any contravention of the Consumer Protection Act (CPA), the Commission will decide on who to prosecute.
Crowd1 claims to be a network marketing firm. However, it has been accused of operating as a pyramid scheme that generates income from signing up new members rather than selling products.
Thousands of South Africans have joined Crowd1 including well-known celebrities.
The Financial Sector Conduct Authority's (FSCA) earlier this week warned consumers against Crowd 1, which is not authorised to render the financial services it is providing.
Crowd1 is neither an authorised Financial Service Provider (FSP), nor is it a representative of an authorised FSP.
There is also no record of this entity having applied for a license with the FSCA.
Crowd1 told Moneyweb that it makes its money through the sale of products such as education packages. It disputed findings made by regulators like that of the Bank of Namibia that it is actually a pyramid scheme, with most of its revenue derived from getting existing members to sign up new members.
Recruiting people to be part of a pyramid scheme or a multiplication scheme is a punishable offence.
