Authorities admit difficulty curbing pyramid scams

OFFICIALS of government agencies admit difficulties in going after pyramiding scams which are rampant in the region.

The Department of Trade and Industry (DTI) representative identified the scam as one of the common problems encountered by the agency. This was presented during the recent Regional Law Enforcement Coordinating Committee conference.

Members of the Crime Investigation and Detection Group (CIDG) and the National Bureau of Investigation (NBI) reacted on the issue expressing their confusion when they encounter such a case. Both asked DTI the elements and grounds they should consider to be able to prosecute a scammer.

Legal action lawyer Jinky Fianza said that while these pyramiding groups are registered, they do not have the authority from DTI to sell products and engage in human investment–income generating business.

She further explained, “Chain distribution plans or ‘pyramid sales schemes’ means sales devices whereby a person, upon condition that he makes an investment, is granted by the manufacturer of his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments: Provided, that the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit: provided, further, that the limitation on the number of participants does not change the nature of the plan.” This is defined under Article 4(k) of the Republic Act 7394 or known as Consumer Act.

DTI Regional Director Myrna Pablo admitted her agency’s difficulty to identify a scam group because of the different tactics these groups employ as shields against the law. She added these groups can easily escape arrest because of their added procedures in the scam which eliminate the thought that they are such.

“As of now, we can’t just confirm kung sila ba ay engaged on pyramiding. It is so difficult to determine right now what are the groups involved, so we have to continue investigating.”

The scam is rampant in Baguio City but none of the perpetrators were arrested yet. Law enforcers expressed their difficulty on how to classify the person whether a victim or a perpetrator. They claim most of the ‘victims’ are afraid to speak because they are also partners in the scam.

“It is very complicated on how to determine if a person is a perpetrator or a victim. We are still determining the levels of the perpetrators and the victims,” Pablo said.

Article 53 of the RA 7394 states chain distribution plans or pyramid sales schemes will not be employed in the sale of consumer products. The DTI has jurisdiction over complaints where the perpetrators “sell” products, which are understood to refer to consumer products, whereas the Securities and Exchange Commission has jurisdiction over investments.