Tuesday, 14 June 2016: The Competition and Consumer Protection Commission (“the CCPC”) has today issued a warning to consumers not to engage with a company suspected of operating a pyramid scheme, that has been targeting consumers in Ireland. This warning follows an examination by the CCPC of the activities of a business formerly trading under the name “EmGoldex”, who the CCPC believe is now trading as “Global InterGold”.
The CCPC commenced an investigation of the business activities of the online store EmGoldex following information provided by a consumer though the CCPC’s helpline. The CCPC found that the company offered potential customers an opportunity to purchase gold bars for a minimum cash cost, if they engaged in promotional activities and recruited other participants. It was the recruitment aspect of their business model that indicated the company might be operating a pyramid scheme.
In the course of its investigation the CCPC consulted with the Philippines Securities and Exchange Commission (SEC) who confirmed that they consider the company’s activities to be a scam. The SEC also confirmed that EmGoldex is neither a registered company nor authorised to solicit investments from the public in the Philippines. SEC has issued ‘cease and desist’ orders against both EmGoldex and Global InterGold to immediately stop them from seeking investments from the public.
The CCPC shares the concerns of the SEC. During the course of the investigation, the CCPC interviewed individuals who had been approached by the company and also individuals who invested in, and as a result, were misled by the scheme. The investigation concluded that the promoters of the scheme reside outside of the jurisdiction and the CCPC is therefore not in a position to take enforcement action.
Isolde Goggin, Chairperson, of the Competition and Consumer Protection Commission commented, “Trading practices such as those operated by EmGoldex pose significant financial risk to consumers. Pyramid schemes come in many different forms and so consumers should always be very wary of any scheme which promises easy returns, even if a trusted friend or family member is recommending it. A common characteristic in pyramid schemes is that they are often based on recruiting others and moving money from new joiners to those higher up the pyramid. This type of scheme or business model is unsustainable as it requires more and more new joiners to keep it going. It inevitably leaves many of those who join considerably out of pocket.
It is on this basis that we are strongly warning consumers not to engage with either Emgoldex or Global InterGold or they will most probably lose their money. Consumers should also be aware that knowingly participating in a pyramid scheme is illegal under Irish law. If a consumer has information about a similar scam or pyramid scheme operating in Ireland they should contact us through our website ccpc.ie or by calling our helpline on 1890 432 432.”
Further details about Pyramid Schemes
Pyramid schemes are marketing and investment frauds in which an individual is offered an opportunity to market a particular product. The profit is earned not by the sale of the product, but by the recruitment of other individuals. Members are led to believe that by recruiting two or more new participants they can recoup their original investments. Pyramid schemes and/or their members fail to tell potential participants that it is mathematically impossible for everyone to recoup their investment and to make a profit.
Under the Consumer Protection Act 2007 it is an offence for anyone to establish, operate or promote a pyramid promotional scheme, to knowingly participate in such a scheme or to induce or attempt to induce another person to participate in such a scheme.