Warning on Ponzi Schemes Promising High Returns: Disguised Savings Groups Collect Money and Disappear...

Sharp Increase in Suspected Illegal Fundraising Reports This Year
"Diversification and Sophistication of Methods"

[Asia Economy Reporter Kim Hyo-jin] Company A, suspected of illegal fundraising, solicited investments by promising guaranteed returns if invested in a promising goods sales platform business. They claimed that a fixed amount would be paid daily or monthly, allowing investors to recover their principal within a few months and even receive guaranteed high returns for life. By paying referral commissions to new investors, most investors introduced acquaintances or registered themselves as subordinate investors, resulting in many making large investments.

Another company B, also suspected of illegal fundraising, formed a rotating savings group and promised guaranteed investment returns while collecting funds from an unspecified number of people. Company B stated that once a certain amount of investment funds was collected, they would return 10 times the investment amount in order of investment, paying 5 times in cash and automatically reinvesting the rest. Despite having no special source of profit, they lure mainly elderly people by promising profits in the order of entry as more members join, a typical form of "rolling over" and "Ponzi scheme."

Under the low-interest rate environment, illegal fundraising activities promising principal guarantees and high returns to investors seeking high-yield investments have recently increased. Accordingly, the Financial Supervisory Service (FSS) issued a consumer alert "Caution" on the 23rd. According to the FSS, reports and consultations on illegal fundraising received by the FSS Illegal Private Financing Reporting Center from January to October this year totaled 555 cases, a 41.6% increase compared to the same period last year. The FSS has requested investigations by prosecutors and police into 77 companies where specific allegations were revealed through victim reports and evidence.

The FSS explained that illegal fundraising methods are diversifying, such as disguising as traditional rotating savings groups, and the tactics are becoming more sophisticated, including inducing installment payments by credit card to allow investments even when cash is insufficient, so special caution is required.

Illegal fundraising activities typically emphasize the early stage of the business, urging investment now to make big money, stressing the importance of early entry and vested interests, or promoting the business as a platform that succeeds only by recruiting many members. They recruit investors as recruiters and pay performance bonuses based on recruitment results, operating in a multi-level marketing style.

Some companies registered or reported as multi-level marketing or door-to-door sales businesses to the relevant authorities engage only in monetary transactions without providing goods or services, promising high returns on investments. They also advertise business registration (tax office) or multi-level marketing registration (local government) as if the government has authorized fundraising, thereby soliciting funds.

These companies are usually only known through introductions or recommendations by existing investors or recruiters. When ordinary people call to ask for the representative’s name, address, or business details, they often hesitate to disclose clearly and instead encourage visiting the office for explanations. Illegal fundraising companies typically pay high interest and recruitment commissions initially but delay payments and disappear when new investments cease. The FSS therefore urges suspicion of any high-interest investment that guarantees principal. If you suffer damage from illegal fundraising, secure evidence such as briefing materials, transaction records, and recordings, and report to the police or the FSS Illegal Private Financing Damage Reporting Center (☎1332, then press 3).

This content was produced with the assistance of AI translation services.