MFSA issues warning about pyramid schemes posing as multi-level marketing businesses

The Malta Financial Services Authority (MFSA) said that it became aware that multiple individuals were promoting alleged educational events taking place in Malta on the subjects of forex, cryptocurrencies, stocks and other financial products.

“Information available to the MFSA indicates that as part of such events, multi-level marketing (MLM) schemes have been attempting to recruit Maltese residents. The MFSA wishes to alert the public of the risk that that some MLMs may in fact be Pyramid Schemes in disguise.”

Pyramid schemes are scams sustained by the income generated through the recruitment of more members.

“Consumers should proceed with caution when approached by individuals promoting a recruitment focused business model. Recruitment attempts may also come from close friends or family and prior research is highly advised before joining such ventures.”

Red flags that an MLM may be a Pyramid Scheme: No real products or service; Highly confident promises of easy income, “guaranteed”; Subscription or monthly payment required; and pressure to recruit members.

The Authority advises consumers of financial services to be extra cautious when being approached with offers of financial services via unconventional channels such as unsolicited telephone calls or social media private messages. The MFSA recommends that consumers also inform those less knowledgeable in financial services which may be more prone to fall victim to such offers.

The MFSA would like to remind consumers of financial services not to enter into any financial services transaction unless they have ascertained that the entity with whom the transaction is being made is authorised to provide such services by the MFSA or another reputable financial services regulator.

A list of entities licensed by the MFSA can be viewed on the official website of the MFSA portal. If you are a victim of a scam or think you might be dealing with an unauthorised entity or any other type of financial scam, first of all stop all transactions with the company and contact the MFSA as soon as a suspicion arises.