Financial Pyramids: How to Avoid the Traps
Automatically translated summary. The full text is available in Romanian.
An information note by Expert-Grup and the National Bank of Moldova, produced under the National Financial Education Campaign, explains what financial pyramids are, how to recognise them, which types are common today and what to do if you have invested in one.
A financial pyramid pays participants from the contributions of new entrants rather than from real investments, and promises very high returns, for example 300% a year. All pyramids always collapse, so there is no guarantee of recovering the money. Well-known examples are “MMM” in 1990s Moldova and Charles Ponzi's scheme in the USA in the 1920s.
Warning signs include fantastic returns, aggressive advertising, “guaranteed profit”, vague answers about the source of income, no licence, no information on founders, untraceable payments and pressure to bring a friend. Current types are pseudo-businesses, HYIP projects, pseudo online games and “magic wallets”. Readers should check documents, registration address and date, and read contracts. Victims should ask for a refund, notify the National Financial Market Commission, file a complaint with the prosecutor's office or bring a collective court action, though recovery chances are low.
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