Trading Schemes, Pyramid Selling Quick Facts
BERR cannot give advice on individual schemes, but we do take enforcement actionagainst schemes which break the law. This Department will consider complaintsabout trading schemes which may be acting illegally. Complaints should beforwarded to Consumer and Competition Policy Directorate, BERR, 1 Victoria Street,London, SW1H 0ET, setting out, in as much detail as possible, the nature of thecomplaint.We are unable to evaluate all schemes immediately. Any dealings this Departmentmay have with promoters are in confidence and that interpretation of the Fair TradingAct and the legality of individual schemes would ultimately be a matter for the courtsto decide.
Q5. I have been invited to join a trading scheme and make a lot of money.Should I put money in it?
The Department cannot give advice on individual cases. However, we encouragepotential participants to consider:• Do I understand what is being offered to me?• Do I know what I will have to pay?• Do I understand that this is a self-employment opportunity and earnings will dependon the market and my efforts?• Is there a demand for the products of the scheme and can I honestly recommendthem to others?• While I have a legal right to a contract, do I understand that, if things goes wrong, itwill be up to me to enforce my rights?• Am I prepared to take the risk?• Should I seek independent advice before joining? Compliance with the legislationdoes not mean that a scheme is commercially viable. Potential participants shouldseek independent and professional business and legal advice before signing anycontract.
Q6. I have been asked to join a chain gifting scheme. Should I get involved?
Under the Gambling Act 2005 it is an offence for a person to invite someone to join achain-gift scheme or for them to knowingly participate in the promotion,administration or management of a chain-gift scheme.
Q7. I have lost money in a chain gifting scheme. Can I get my money back bygoing to the Small Claims Court?
The Department cannot advise on individual cases. Whether or not you could obtainsome redress in the Small Claims Court would depend on the circumstances of thecase (e.g. evidence of what you were told when joining the scheme, whether specificpromises were made, whether there was any evidence of deception.) You need totake professional legal advice on your case.
Q8. Why do chain gifting/pyramid schemes not work for most people?
All such schemes would need an infinite supply of new participants for everyone tomake money. Since the supply will always be finite, the pyramid must collapseeventually and most participants will lose their money.