Issue Date:  -  Wednesday, 27 September 2006

Diamond pyramid scheme warning

WA consumers are being warned not to become involved in the latest pyramid-trading scheme to hit Western Australia.

Canadian Diamond Traders (CDT) is being promoted on the Internet, explaining how people can join the scheme and by recruiting others, receive a diamond and money at exit when they reach the top of the pyramid.

The website shows a pyramid diagram with four levels. Recruits place a deposit on a diamond through the website and commence on the base level as a Diamond Miner (8 positions).  By recruiting others, participants progress through to Diamond Cutter (4), Polisher (2) and the top, the Diamond Collector.  Once reaching the top, they supposedly receive the diamond and $3,000 cash.  They are also encouraged to rejoin, which continues the scheme.

CDT’s website makes such statements as:

• If you have $100 to invest and you know two other people with $100 to invest, you can make $3,000 over and over again;
• You earn commissions by referring other members to the program.  When they make a purchase, you get credit for the sales; and
• The more people you directly sponsor, the faster you will cycle out and the more frequently you will cycle.  The ideal is to sponsor at least two members as soon as possible.

Consumer Protection believes the scheme to be a pyramid trading scheme in breach of the Fair Trading Act. 

“With pyramid trading schemes, people are attracted to the prospect of earning quick money merely by recruiting other people into the scheme,” Consumer Protection Commissioner Patrick Walker said.  
 
“One consumer was recruited and paid for by an interstate friend, even after he advised her that in his opinion the scheme was a pyramid.

Participants risk prosecution or other legal action if they ignore warnings and become involved in this scheme.  They risk fines of up to $20,000 as individuals or $100,000 if they are involved as a company.

Consumer Protection is eager to hear from anyone who has been approached to participate in this scheme. Telephone 1300 30 40 54.