GARDAÍ HAVE BEEN made aware of a number of pyramid schemes that have been promoted on social media in recent months.
The majority of the schemes that have come to the attention of officers have been seen on Facebook and involve people buying into a company. In most cases, the companies being promoted sell cosmetics.
Officers believe there has been an increase in this type of activity since the start of the lockdown measures imposed in March.
These schemes are often offered through Facebook’s Marketplace, a platform described by the social media giant as one that “makes it easy to discover, buy and sell goods locally or shipped”.
Back in June, TheJournal.ie reported how gardaí were cracking down on a group of suspected thieves who it’s believed were using Facebook Marketplace to sell high-end stolen cosmetics.
Officers have not yet ruled out the possibility that those involved in the pyramid schemes are using stolen products.
On many occasions, people are being asked to “buy in” to the company being promoted, usually for a few hundred euro.
What is a pyramid scheme?
Pyramid schemes are illegal in Ireland. Under Section 65 of the Consumer Protection Act 2007, it is illegal in Ireland to establish, operate, promote or knowingly take part in a pyramid scheme.
According to the law, if convicted, an operator, promoter or participant in a pyramid scheme could be liable to a fine of up to €150,000 or up to five years’ imprisonment or both.
Pyramid schemes typically work by offering people the opportunity to buy into a company associated with a particular product. This money goes to those above the individual in the ‘pyramid’.
Participants in the scheme can recoup their original investments and qualify for a pay-out by recruiting new members, who join the pyramid below them.
But as the supply of potential investors is exhausted, the pyramid collapses, leading to those at the bottom of the scheme losing out on their original investment and any subsequent investments.
The schemes are quite often found on Facebook’s Marketplace with tags such as “make money from home”, “easy money to be made during lockdown”.
However, experts warn that something which looks too good to be true usually is.
Last month, officers attached to the Garda National Economic Crime Bureau warned that there was a 61.5% rise in reports of investment fraud to officers in 2020.
It has been estimated that people have handed over around €3 million as a result of fraudulent activities such as pyramid selling and Ponzi schemes this year alone.
Gardaí have urged anyone who believes they may have been the victim of one of these crimes to contact them.
Facebook said that it takes no responsibility for items sold and bought on its marketplace. It said that users who see breaches of its commerce policies should flag the advertisements with Facebook as soon as possible.
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