District Police Chief (Thiruvananthapuram City) Balram Kumar Upadhyay has asked the public to exercise caution against Ponzi or multi-level marketing (MLM) schemes that end up duping many.
Mr. Upadhyay, who was been undertaking a month-long awareness programme against cybercrime and financial frauds, said such pyramid structure schemes deceive those who fall for the promise of easy and quick money if they enrol by paying a certain sum and then add more members.
The schemes assure high returns and also pay the first few instalments to the investor as promised so that word of mouth publicity would attract prospective investors. While commission is paid to the investor for including more persons in the scheme rather than for the sale of products, the scheme becomes unsustainable after some time when the number of those enrolling starts to come down. This prompts the fraudsters to wind up the scheme and flee with the money.
No sale, just returns