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Crowd1: Where is the NCC?

The commission needs to investigate.
The consumer body is keeping schtum on the matter, which makes no sense when people (consumers) are at risk of losing their hard-earned money. Image: Shutterstock

From the outside, the National Consumer Commission (NCC) doesn’t seem to be taking the controversy around Crowd1 seriously.

Crowd1, a Spanish company run by Swedes, claims to be a network marketing firm. However, it has been accused of operating as a pyramid scheme that generates income from signing up new members rather than selling products. 

The NCC, which under the Consumer Protection Act is the lead regulator when it comes to bringing such schemes – which are illegal – to book, has not even started investigating Crowd1.

Crowd1 claims no wrongdoing and that it sells educational products. It has however been prohibited from operating in Namibia by the Bank of Namibia. 

In South Africa, the Financial Sector Conduct Authority (FSCA) has warned against doing business with the company as it is providing an unregistered financial service.

For its part, the South African Reserve Bank’s (Sarb) Prudential Authority has said that it is investigating whether it is acting as a financial service provider in taking deposits from the public.

While these local regulators have taken some action, the NCC has been silent on Crowd1.

Hints, clues, signs

It’s not as if it has not been informed about it.

Yes, it might have missed its glitzy launch at the Gallagher Convention Centre on November 23 last year, when well over 6 000 people from around the region attended.

It might also have missed the subsequent creation of several local Crowd1 Facebook groups that now have members numbering in the thousands.

But it certainly could not have missed the Bank of Namibia’s statement on February 24 banning Crowd1 from operating there.

And even if it missed the Bank of Namibia’s announcement, someone should have pointed out the statement put out by the Direct Selling Association of SA in early March welcoming the bank’s move.

When Moneyweb asked the commission in early May if it was looking into Crowd1, it said it wasn’t as it had not received any complaints.

The NCC did concede that it does not need a complaint from the public to investigate, and could do so if it wanted to.

When Moneyweb contacted the NCC this week to see if it was investigating, it did not get back to us.

This was despite the FSCA putting out a statement on Crowd1 on Monday saying that it is not a registered financial service provider, and the Sarb’s Prudential Authority saying on Tuesday that it is investigating it.

Crowd1 has always claimed it that it is not a pyramid scheme. Given the cloud over it, an inquiry by the NCC could easily clear this up.

By not investigating, it does both Crowd1 and its members a disservice.

An investigation could open the way for it to operate in SA without the air of mistrust around it – if it’s found to be what it says it is.

The need to know

If the NCC finds it to be a pyramid scheme, the people participating in Crowd1 will know they are taking part in a criminal scheme. But as things now stand, no one has any clarity.

By staying on the sidelines, the NCC leaves open the way for ordinary people to possibly lose a lot of money.

Read: Ponzi participants ‘more likely’ to defraud their employers

Many South Africans have already invested substantial amounts of money in Crowd1.

At its launch there was already talk of people selling their cars and cashing in their pensions to take part in it.

I’m not in a position to say if Crowd1 is a pyramid scheme or not, but what I do find troubling is how everyone I know who is a part of it talks about how much money they are going to make from it. They hardly mention the product they are selling.

It’s as if in the greater scheme of things these education products don’t really matter.

Listen to Nompu Siziba’s interview with Nancy Bambo, head of market content at Momentum Securities:

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Now can we please investigate MTI, this is a REAL SCAM if there was one.

Firstly, you have to rely on your common sense to avoid these scams. If you are driven by desperation, ignorance or greed (or a combination of all 3) you are guaranteed to be screwed over at some point by some scam.

By their very nature, any organization that tries to regulate against dodgy behaviour will be behind the curve due to the need for formal, lengthy investigations.

If one get some product or service for the money one is paying to crowd1 (crowd1 says the product they sell is an educational package) and their annual “turnover” for this “product” is above R1million they must certainly registered for vat / normal tax etc – would be interesting to see if they are registered or not.

in what format is crowd1 business done?? – company / partnership / cc / individual???

the website is very vague – one first has to become a member / join the crowd to find out more – i won’t even consider that route

Yes investigate MTI as well. I know of someone who climbed out of Crowd1 and into MTI. These damn scams just keep popping up.

I can not believe some people would sell their cars and even cash in their pensions for crap like this! A fool and his money shall soon be parted.

My understanding, which I do not agree with, is that the Consumer Commission only act on complaint.

So if no one has yet complained about their dealings with Crowd1, there is no investigation.

Essentially the Commission is only reactive, and not proactive.

I do not think Crowd1 is legit. In order to make money, you must recruit people. There is no single product that they sell. There is also bitcoin on the platform.

If something is too good to be true in appearance, it probably is too good to be true in reality

NCC is a tooth fairy, another 2year hurdle to get to the NCT.

End of comments.


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