Up Money (PTY) Ltd has been fined R1 million for conducting a pyramid scheme in South Africa, subsequently contravening Section 43 )2) of the Consumer Protection Act.
The National Consumer Commission (NCC) referred Up Money to the Tribunal following its investigation into allegations that Up Money is a pyramid scheme.
In August last year, a complaint from a person in East London led to the Asset Forfeiture Unit(AFU) obtaining a preservation order to freeze the bank accounts worth more than R18 million of the directors of UP Money.
The Deputy Minister for the Department of Trade, Industry and Competition (dtic), Ms Nomalungelo Gina says while Up Money promoted their scheme as a “stokvel” to lure participants during the pandemic, the Tribunal confirmed that it is not a stokvel but, a pyramid scheme, as their operation fits the description of a pyramid scheme as provided under Section 43 of the CPA.
"Up Money’s business model was unsustainable as it relied heavily on new participants feeding into the scheme,” she added.
The Commission urged South Africans to be careful not to contravene the CPA while trying to explore other sources of income.
What is a pyramid scheme?
The Consumer Protection Act describes a pyramid scheme as an arrangement, agreement, practice or scheme if participants receive compensation derived from their respective recruitment of other persons as participants, rather than the sale of any goods or services.
Pyramid schemes are prohibited in South Africa and continue to grow daily, especially on social media platforms.
Up Money has 20 working days to pay the fine.
