$6K gifting scam: Pasifika targeted as convictions highlight dangers of pyramids

The Commerce Commission highlights the need for vigilance after two people were convicted of being involved in an illegal pyramid scheme targeting Pacific communities in South Auckland.

Speaking on PMN Tonga with John Pulu, Joseph Liava’a, the associate commerce commissioner, says the scam, officially known as the $6K Gifting Cooperative, promised participants $6000 for recruiting others to join.

“The promise was if they paid $750 either individually or they formed a syndicate, and then they went out and recruited two people, and then those two people went out and recruited another two people, then they would get $6,000 after 21 days.

“But as we know, when you run out of recruits, these pyramids inevitably and always fail, and it's usually just the people at the top and the people who are in first who get their money, and unfortunately, the money's never really recovered for everyone else.”

Two promoters of the scam, Frances Saimone and Patricia Pousini, pleaded guilty in the Manukau District Court to charges related to promoting a pyramid scheme. Saimone was fined $33,306 and ordered to pay $1500 in reparations to two victims.

Another individual, Feleti Halafihi, received a warning and was fined $9000 for failing to comply with a statutory notice.

The scheme was promoted through in-person events, video, and social media platforms, such as Facebook, between 2020 and 2021.

Liava’a says Saimone used Pacific values such as religion and generosity to promote the scheme, telling participants, “We are not a pyramid scheme, first of all because a pyramid is illegal....giving has been around since Adam and Eve”.

The judge recognised that if it had not been for the current financial circumstances of the promoters, a much larger fine would have been appropriate.

Watch the full interview with Commerce Commission's Joseph Liava'a.

A wide impact

Liava’a says it’s difficult to determine the exact scale of the scheme.

“It is estimated that at least 240 people fell victim to this scheme and between $225,000 and $336,750 was invested at a minimum.

“Because this was cash-based, we actually believe that the amount lost and the amount of people involved was a lot higher.”

Pyramid schemes

Pyramid schemes are illegal under New Zealand’s Fair Trading Act.

Liava’a warns people to be wary of opportunities that appear too good to be true, especially since Pacific communities with close-knit relationships can be vulnerable to exploitation.

“Scammers like to target any well-linked and well-networked group - churches, for example - where there is a high degree of trust,” Liava’a says.

Scams can come in many forms. Photo/PMN News

As for compensation, Liava’a is clear: “Unfortunately, the majority of people will not get their money back.”

He urges families to speak up and report any suspicious activity.

“Don’t just trust that things are as they seem. If your way of making money is to recruit other people and there’s no actual product or service, that’s a big red flag.

“If you are involved, stop paying any money over, warn your family and friends, and let us know at the Commerce Commission.”

For more information or to report concerns, visitwww.comcom.govt.nz or call the Commerce Commission on 0800 943 600.