Residents warned: UP Money is a pyramid scheme
More than 228 900 consumers are alleged to have been defrauded of of their monies by the Up Money scheme whose account has since been frozen.
The scheme is said to have accumulated millions of Rands. Participants had to pay a once off joining fee of R180 and recruit five people to qualify for groceries.
In the past two weeks, joint efforts by the National Consumer Commission (NCC), the National Prosecuting Authority’s Johannesburg office of the Asset Forfeiture Unit (AFU) and the Financial Intelligence Centre (FIC) led to the seizure of assets and the freezing of bank accounts belonging to the scheme.
NCC spokesperson Phetho Ntaba said they were alerted about the pyramid scheme.
“Pyramid Schemes are prohibited under Section 43 (2) of the Consumer Protection Act (CPA). Up Money unlawfully exploited the Covid-19 pandemic and food security concerns to lure consumers into joining and participating in the Up Money pyramid scheme,” said Ntaba.
The modus operandi of Up Money was to use social media to solicit members of the public to participate in the scheme.
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“As is typical of all pyramid schemes, new participants made up the base of the pyramid and provided funding for participants who were recruited prior to them and who occupy higher positions in the pyramid.
Following requests from the NCC, the FIC analysed Up Money’s bank statements and established that the scheme, which promoted itself as a stokvel, had received an amount of R42 720 501.82 between 4 May and 2 July.
Some of the funds were then moved into the business account of another company of which one of the directors of UP Money is the sole director. More than R14.5 million was dissipated through point of sale purchases at various retail stores. In addition, three luxury motor vehicles were also purchased namely, a Hummer, a Jaguar and an Audi TT,” Ntaba said.
The three luxury cars were purchased directly from the Uniitco (Pty) Ltd (Uniitco) bank account which received the proceeds from the First National Bank Gold business account of Up Money in an amount of R4million.
“UP Money and Uniitco, are linked through its directorship and business address. The directors of UP Money are both signatories on its business bank account.
Uniitco has a sole director who is a signatory on its business bank account as well as that of UP Money’s.
Although Uniitco paid for all the vehicles, the vehicles were not registered as company assets but in the private name of a director,” she said.
She added that the effective cooperation of law enforcement agencies and the NCC serves as a deterrent to offenders and ensures that crime will not pay.
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“Consumers are reminded that as participants or members of a pyramid scheme they are legally responsible for the claims they make about the company, its product, and the business opportunities it offers.
The NCC also warns consumers that it is prohibited to participate in or promote a pyramid or multiplication scheme,” she said. She added that, “the NCC, the FIC and the AFU will continue with their efforts to prevent even more people being swindled out of their money.
Members of the public are warned not to fall victim to schemes such as these which make unrealistic claims to encourage people to part with their money while initiators of the schemes enrich themselves.”
Coordinator of UP Money Tzaneen, Pat Shilubane who joined the scheme in May, said she cannot confirm nor deny the allegations that UP Money was a pyramid scheme.
“All we know is that the company’s account was frozen but I cannot confirm nor deny that this was a pyramid scheme. We received our food and we are satisfied,” said Shilubana.
She said it took long for her and her people to receive their groceries because of ‘backlog’.
“I received my groceries on 25 July and I can say we received more than our monies worth because you cannot buy this food with the R180 that we paid. Hands off UP Money,” she said.
