Pyramid schemes - Investors must heed SSIA warnings

ANYBODY looking forward to a windfall from the maturing SSIA schemes should take warnings from the gardaí very seriously.

They are concerned that some people may be tempted to invest in pyramid schemes which have already proved to be a hard lesson for many.

Greed can cloud judgment, and given the fact that people are anticipating an average of €20,000 from their SSIA account, depending on their investment, some may want to maximise it.

There are sound methods of achieving that ambition by using the professional advice available through banks and other financial institutions.

With about €16 billion due to be released to the 1.1 million SSIA account holders, it is inevitable that spurious and misleading schemes will flourish to relieve the unwary of substantial sums of money.

Gardaí are concerned that pyramid schemes have already relieved gullible people of €20m.

Already familiar to the public is the so-called, and partly collapsed, Liberty pyramid scheme, which spread from West Cork to several other counties, no doubt attractive to the unwitting because it suggested an eight-fold return on €5,000.

A comparatively small number of people may, indeed, have benefited from it but for the majority it proved to be a salutary lesson in a financial game of chance with absolutely no guarantees.

They lost their investment and very often induced family members and friends to engage in the scheme as a desperate and futile effort to frantically recover their outlay, as the scheme needs an almost limitless supply of investors to try to sustain it.

Inevitably, the money peters out and the fallout can too often be bitterness and rancour among family and friends.

Many such money-making devices — for the originator — may technically not be illegal because of the manner in which they are couched, and to instigate legal action or a prosecution against them may be extremely difficult.

Because of an incident involving another scheme in West Cork, a file is being prepared for the Director of Public Prosecutions which is likely to act as a test case in probing the scheme’s legality.

According to the Director of Consumer Affairs, legislation scheduled for next year is designed to increase public protection, but in the meantime information accrued by the consumer is the best weapon against dodgy schemes.

Very often they are originated outside the country — as are many other types of money-divesting plans — and predicated on the very human condition of greed.

Commonsense is the best protection against being ripped off, and it would be far better to enjoy the fruits from sensibly investing in an SSIA, by remembering that if something appears to be too good to be true — it probably is.