11 Sep 2017

Non-Banking Financial Institutions Regulatory Authority (NBFIRA) communications officer, Mr Augustine Sepoe has warned Batswana who invest in a closed Internet based Ponzi scheme called Eurex Trade.

Presenting at the ongoing Central District Council meeting, Mr Sepoe said with the investment set up, investors did not know whom they were transacting with and in which country or whether the business was legitimate.

“This is very risky as many have lost their hard earned savings or investment to the illegitimate business,” he said.

Mr Sepoe said Ponzi schemes were scams that paid initial investors with proceeds from new ones under the guise that they were making a business investment when in fact the underlying business was nonexistent or unsuccessful.

“Eventually when there are not enough newcomers to pay existing investors, the scheme falls apart with your investment,” he said.

He advised that to avoid being scammed, one should research about the company before investing.

“Understand the company’s business products before you invest, and be cautious of unsolicited offers such as e-mails and telephone calls,” he stated.

Mr Sepoe also cautioned Batswana to refrain from operating micro lending businesses without NBFIRA licenses, saying that attracted penalty fees.

“The penalty fee is calculated as P2 500 of every day you have been in operation,” he said.

He urged councillors to advice the public on the matter.

He said NBFIRA was aware of metshelo or friendly societies, but said such should only happen between colleagues or groups and must not lend to a person outside the group.

Mr Sepoe advised those who have entered into contracts with institutions such as micro lenders, insurance, asset managers and pawn shops to read contracts before signing.

“Always make sure you sign a contract stating how much was borrowed, how much is the interest and the duration of the loan,” he said.

He said should pawn shops decide to sell property, the owner should be made aware.

“Pawn shops cannot sell your property without your knowledge,” he said.

Mr Sepoe said at present, NBFIRA did not have the power to regulate interest rates, but that they were in consultation with government to rectify that.

He said since they did not have control over interest rates imposed by micro-lenders, they were following a principle called in-deplum rule.

“Under this rule, should the borrower default from the payment terms, a lender is allowed to charge five per cent of the principal amount outstanding until it amounts to the principal amount, thus a borrower will pay the interest charged, the principal amount and the default charges, however, all costs should not exceed the double principal amount,” he said.

He noted that their organisation was categorical that micro lenders should not obtain a customer’s bank cards, national identity cards or any other official document, including bankcard pin numbers for collection of loan installments as such was a violation of the law.

He said other issues which they have identified for non compliance included operating in residential areas, using collateral as security and not following policy on cases of disputes. BOPA