Advisory Warning No. 1 of 2018 - Pyramid Scheme Frauds (2018-05-03)

Summary

This is a public investor alert issued by the BVI Financial Services Commission warning the public about pyramid scheme frauds and related investment scams. It explains how pyramid schemes work, how they differ from legitimate business or investment structures, and why they inevitably collapse leaving most participants with losses. It imposes no new rules on regulated entities; it is informational and cautionary in nature.

• What a pyramid scheme is: A fraudulent, non-sustainable scheme where money is exchanged primarily for recruiting new members rather than for any legitimate product or service
• Warning signs highlighted: No genuine product or service is delivered; returns depend on recruiting new participants; promotional focus is on recruitment rather than sales of goods or services
• Vulnerable groups noted: The FSC specifically flags churches and other faith based organisations, and notes heightened risk when investors face financial hardship (e.g. after natural disasters)
• Legal basis: The Advisory is issued under Section 4(1)(l) of the Financial Services Commission Act, 2001

The Advisory directs readers to the FSC website for further guidance on evaluating investment opportunities and avoiding fraud, but does not create any filing, reporting, or compliance obligation for licensees or the public.