Whatsapp stokvels are back to scamming people

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Whatsapp stokvels are back to scamming people

James Motlhaping

South Africa is struggling with rising numbers of unemployment for the past years, the International Monetary Fund recently reported that the unemployment rate in the country is expected to hit 35% by December 2020.  

With this, people are forced to make other plans of generating income in order to survive. WhatsApp stokvels have become one of the quick ways to make money.

The scheme gained popularity in 2019 but later disappeared when people lost their money. But it recently re-emerged with a new name—WhatsApp gifting.

Stokvel Talk speaks to Lizeka Mqabanga, a 27-year-old unemployed mother of two from Duduza, who explains that WhatsApp gifting is an easy way to make money. But she admits it’s also some kind of pyramid scheme, with only a few getting the money and before you know it the whole group collapses.

“I joined the R200 stokvel in September, I was not paid and I recruited people who were also not paid. I had to pay them back their money.”

“I am not working so I thought  I was going to make money in the stokvel as I have seen proof of payments of people paid something like R1 000 to R1 200,” she tells Stokvel Talk.

Mqabanga says when she joined she was number 9 in the group of 10, with everyone contributing R200 for number one to earn their R1000.

Once this person is paid, the group was split into two groups, meaning the bottom five will now be the top five in the new group and they have to recruit more members for the group to have 10 members.

“In the second group, I was number 4 but had to recruit someone who will join with R200 so that number one can be paid,” Mqabanga explains.

By the time she was at the top of the group, people were not recruiting and she was never paid.

According to Sanlam Reality, WhatsApp stokvels are a new look for age-old pyramid schemes. WhatsApp stokvels aren’t like traditional stokvels—in fact, they work like a pyramid scheme, where participants earn money by finding new participants, Sanlam Reality adds.

The person at the top of the scheme collects all the money, and those being recruited further down rarely see any of what was promised to them. The first few people to join or invest reap the rewards and the rest, typically, lose money.

In South Africa, these types of schemes are illegal and you should avoid them, as your money is not secure with them.

According to CEO of Mizi Mtshali, as interviewed in Sanlam Reality, Here are a few questions you should ask yourself before joining a WhatsApp stokvel or gifting group

Do I know or trust the person or institution I am dealing with? It’s always recommended that you save or invest your money with a regulated financial institution.

Can I verify anything before I sign up? For example, ask the person who they work for and ask them how they found the service or product offering. Financial planners should be registered and you can ask for their FSP number and call the Financial Planning Institute on 086 1000 374 to verify them. Financial institutions should also be registered and can be checked with the Financial Sector Conduct Authority on 0800 20 37 22.

Is it backed by a reputable company and can it be verified? Are there clear guidelines around the amount of money that will be invested or paid by each member, who will manage the money or how it will be managed, how often payouts will be made, and when?

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