Queensland Police issue warning to be vigilant against pyramid schemes

With a rise in reports of pyramid schemes across the state, Queensland Police are reminding the community to be vigilant.

Queensland Police investigators have issued a warning to the community to be on the lookout for investment schemes after a recent rise in reported pyramid schemes.

The Financial and Cyber Crime Group have received 44 reports of one particular scam app – the Hope Business App – with losses by Queensland victims to this scam totalling approximately $466,000.

According to the Australian Competition and Consumer Commissions’s Targeting Scams report, in 2020 almost $6 million was lost to scams across the Toowoomba region alone in 915 reported scams.

Pyramid or Ponzi schemes are illegal investment scams that aim to attract new investors through offering high returns through little effort.

New participants are required to pay money upfront to join and are told they will earn “commissions” for any new members they recruit.

“They might also claim the more money you deposit, the more commissions you earn. Unfortunately while deposits are accepted willingly, you will be unable to withdraw any money,” a QPS spokesman said.

“While it may appear to be a legitimate scheme, and perhaps even offers a product or service, be aware there are no real investments in such schemes. The promoters at the top of the pyramid make their money by having people join in the scheme but when it collapses, you, and any family and friends you have invited to the scheme, will lose all your money.

“It is against the law to promote or participate in a pyramid scheme.”

While reports to police involve different types of pyramid schemes, all the scams reported have traits in common including making claims of guaranteed income following big upfront costs.

“Substantial start-up costs or joining fees and ‘get rich quick’ promises are red flags an investment opportunity could be a pyramid scheme. Other warning signs to look out for include the promoters making such statements like “this is totally legal”, “this is not a pyramid scheme”.

“Your family or friends may try to recruit you not realising they’re involved in a pyramid scheme. Be wary of any scheme where the product being offered seems overpriced.

“Don’t let anyone pressure you into making decisions about money or investments.”

Learn how to disrupt and prevent being a victim of fraud, visit R U in Control?

To protect yourself from scams, visit Scamwatch.

If you have been the victim of a cybercrime, you can report this online at ReportCyber.