Pyramiding and Ponzi Schemes | 7 September 2023

A type of investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors

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Alburo Law
September 07, 2023

Pyramiding and Ponzi Schemes

“Chain distribution plans” or “pyramid sales schemes” means sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer of his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon the condition of making similar investments: Provided, That the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services, and credit.

(Article 4[k] of The Consumer Act of the Philippines)

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