Warning to Mummies – avoid pyramids

By on 15/02/2010 in News

Birmingham Trading Standards have issued a warning to residents, particularly female residents, who are being targeted by illegal “pyramid” schemes. The schemes offer a 'get rich quick' promise, and their apparent ease of use means that they often prove attractive to mums seeking an extra income that fits in around childcare.

Pyramid schemes work by inviting people to join the scheme and pay an amount of money in to it. They are then encouraged to recruit more people who each bring money into the scheme. When enough people are brought in, the person at the top receives a large payout. The pyramid grows larger and larger and eventually leaves people at the bottom who lose out on payment. Often people are invited to plush venues like expensive hotels while the scheme is explained to them, the implication being that the scheme brings great financial success to people who get involved.

Any scheme that requires people to pay into it for the opportunity to receive a large payout derived primarily from the introduction of other goods into the scheme is illegal under the Consumer Protection from Unfair Trading Regulations 2008.

Often people running such schemes will describe them as 'investment' schemes, so that they can claim they do not fall foul of the regulations. In fact, it is a criminal offence to get involved with a pyramid scheme, either by establishing, operating or promoting such a scheme will mean that people are committing a criminal offence.

Councillor Neil Eustace, Chair of the Public Protection Committee, comments:

“I am extremely concerned that vulnerable people across the city, who often have no other means of raising extra cash, are falling for this scam. Pyramid schemes are illegal, and getting involved with one puts you at risk of a criminal record. People should ask themselves am I being asked to pay money into the scheme and recruit more people who also bring money in? If the answer is yes, steer well clear and report the scheme to Trading Standards”.

If residents have any concerns about pyramid schemes, they can contact Birmingham Trading Standards on 0121 303 6031.


For more information please contact Hayley Meachin on 0121 303 1271/ 07920 750007  hayley.meachin@birmingham.gov.uk

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