Thirteen must-ask questions to shield you from scammers

Swindlers looking for financially desperate people to exploit

The household income of most South Africans has been hit hard by the Covid-19 pandemic, which makes us more vulnerable to falling for a get-rich-quick scheme.

it’s important to ask the right questions when you engage with a person or company that is presenting any kind of investment offering to you.
it’s important to ask the right questions when you engage with a person or company that is presenting any kind of investment offering to you.
Image: 123RF/BULAT SILVIA

If ever you needed to have your wits about you, it’s now. Scammers are looking for financially desperate and vulnerable people to exploit. 

The household income of most South Africans has been hit hard by the Covid-19 pandemic, which makes us more vulnerable to falling for a get-rich-quick scheme.

Lyndwill Clarke, the head of consumer education at the Financial Sector Conduct Authority (FSCA), says it’s important to ask the right questions when you engage with a person or company that is presenting any kind of investment offering to you. 

Clarke says the table and the following questions can help you distinguish between a legitimate investment or stokvel and a pyramid scheme:   

  • Are you registered with the FSCA to sell this financial product or service? 

  • What is your Financial Services Provider (FSP) licence number for verification with the FSCA?

  • Can you show me proof of your company registration?

  • In the case of a stokvel: are you registered with the National Stokvel Association of South Africa (Nasasa) or a similar body recognised by the prudential authority? 

  • If you are a stokvel, can I see your constitution? 

  • How long have you been in the investment business?

  • Is the company you represent an established and respected financial institution?

  • Are you registered with the Financial Planning Institute (FPI)?

  • What are your qualifications?

  • Do you require me to introduce other people?

  • What are the risks of this scheme? 

  • What product am I investing in? Be especially careful of crypto currency products as they are not regulated in SA and there is currently no recourse available.

  • Will I receive copies of signed documentation?

Know the difference between an investment, stokvel or pyramid scheme. Source: FSCA
Know the difference between an investment, stokvel or pyramid scheme. Source: FSCA
Image: NOLO MOIMA
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