The Commerce Commission has issued a warning over a potential pyramid scheme involving a health supplements platform as it investigates the legality of the operation.
The scheme, based in Hawke's Bay, involved several social media groups and promoted a business opportunity through the health supplement platform LiveGood.
When participants joined, they were added to groups including Freedom Lifestyle Revolution, The Official Diamond Rush, and other New Zealand-based Facebook groups, which were linked to the scheme.
Marketing for the scheme primarily occurred through popular social media apps, the commission said, which involved Facebook, Instagram and TikTok.
Commerce Commission deputy chair Anne Callinan said the operation carried the hallmarks of a pyramid scheme – scams designed so individuals primarily made money through the continuous recruitment of others, rather than through the sale of genuine products or services.
"While the investigation is in its early stages, we believe we have a duty to publicise this potentially illegal scheme so Kiwis are aware of the risk of becoming involved," she said.
"It is important any potential harm is limited."
The commission noted the scheme had low-cost joining fees, which meant many participants had multiple memberships. It advised those who had come across the scheme to exercise caution before investing into it.
Callinan said it was crucial that people did their due diligence before becoming involved in schemes of this nature.
"If something seems too good to be true, there's a good chance it is."
FMA warns of another, separate scheme
The commission also noted a separate scheme has received concerns over in Wellington. Although its interim view this was not a pyramid scheme, it has re-iterated a similar warning about it from the Financial Markets Authority.
This scheme originates internationally, it said, firstly under the name of TXEX, but has chanced to other names usch as UICEX, CR GLOBAL, Signal Trader, BG Wealth Sharing Group, and DSJ EX.
This scheme encouraged people to invest in cryptocurrency investment trading platforms, who were informed they would receive a significant return on investment.
"Schemes present themselves in different forms, with different investment requirements and methods of promotion."
Callinan said these schemes entice people by promising high returns quickly and an opportunity to create ongoing wealth, which is "typical of these scams".
The commission said it would provide updates on the investigation into the potential pyramid scheme in Hawke's Bay in due course but, in the meantime, asked those who have further information or concerns about the scheme to get in touch via their website.
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