You are viewing the content for Thursday 9 February 2006

EU to outlaw ‘pyramid’ schemes

By Paul O’Brien, Political Reporter
CONTROVERSIAL "pyramid" schemes will be made illegal under a new EU directive - but it could take almost two years for the ban to come into force.

Under the schemes, people are asked to "gift" sizeable lump sums to others and promised they will eventually receive multiples of those amounts in return.

One such scheme which recently swept across Cork, Kerry and Clare, saw organisers asking people to each gift €10,000 in cash.

Those people were then asked to recruit two more people to the scheme, and promised they would eventually receive a payback of €80,000.

But there was no guarantee they would receive any return and many stood to lose their investment.

Gardaí have warned that this and other gifting schemes are simply variants of the pyramid scams that were outlawed under the Pyramid Selling Act, 1980.

But they are varied sufficiently to ensure there is legal doubt as to whether they are covered under the act.

Because of this, gardaí are unable to take action against the organisers of the schemes.

Opposition politicians have called on the Government to address the situation.

Asked about the issue in written parliamentary questions, Enterprise Minister Micheal Martin said it was ultimately for the courts to decide what the existing law covered.

But he promised to review the act in the context of the Unfair Commercial Practices Directive, EU legislation which must be transposed into Irish law no later than December 12, 2007.

The aim of the directive was "increased protection for the consumer", Mr Martin said, and to achieve this it would outlaw certain practices, including gifting schemes.

"I will ensure that the Pyramid Selling Act 1980 will be reviewed in the context of the transposition of the Unfair Commercial Practices Directive," he added.

The minister finished by urging people to show common sense.

"I would urge people to be vigilant in how they use their money.

"People should reflect on whether it is realistic to expect other people to give them large sums of money for nothing."