Don’t fall victim to a stokvel scam

A former member of a WhatsApp stokvel has warned participants to leave these groups while they can and warned others not to fall victim to unscrupulous administrators making a quick buck.

The former member, speaking on condition of anonymity, commented on the article on the front page of the Highvelder of 7 July (“Stokvel causes anger”).

She said she was also recruited into the stokvel where she pledged R1 000 with the promise of receiving R15 000 within four weeks.

“After the pledge, I recruited 15 people within two weeks with the understanding that I would be paid R15 000 afterwards, but two weeks passed without a payment. I decided to question the administrators about it and they promised to place my name on the list of people to receive payments. Nothing happened. I waited for more than a month, still without the payment,” said the source.

She said she was eventually removed from the group because she became too vocal about the matter and questioned some of the stokvel rules. She said she was surprised to read that members were informed that they played at their own risk.

“These are definitely new rules. Thina asitshelwanga lokho, misha lemithetho (we were never told of these rules, they are new to us),” said the source.

She also alleged that most of the administrators were opening other stokvels to try to raise some of the money owed to members waiting for payments.

Angelique Arde, writing for Personal Finance News, said in a report on pyramid and ponzi schemes that most pyramid schemes claim to be stokvels or communities helping their members. However, there are substantial differences between these schemes and genuine stokvels. She also said genuine stokvels were regulated by the South African Reserve Bank.

Ben Raseroka, a trustee of the Stokvel Social Trust, says on-line that a stokvel is made up of members who know each other personally, who may be attending the same church or live in the same neighborhood, not strangers to one another. He adds that a genuine stokvel is unlikely to generate a 30 per cent profit, it generally does not own a product or service that can sold to the market for profit and funds are regulated by a financial institution.

Mr Raseroka also explains that there are two types of stokvels; rotating and accumulating

In rotating stokvels, members contribute a fixed amount of money to a common pool weekly or monthly and take turns to receive a lump sum to use for any given purpose. The money is not banked, as it is paid out as soon as it comes in and does not earn interest.

In an accumulating stokvel, members contribute monthly and if you pay more, your payback will be proportionally higher. The accumulated funds are distributed once a year to all members. Money is banked and attracts interest.
He also shares tips on how to spot an investment scam: It claims to pay double-digit monthly returns; claims to be an opportunity of a lifetime; one cannot understand how it makes money; and returns or profits earned may be dependent on a participant introducing more members to the scheme.