Beware of their tactics: Avoid pyramid schemes at any cost!

As the time-tested proverb goes, “wealth gained hastily will dwindle, but wealth accumulated through diligence will endure”, it is a well-established reality that financial prosperity cannot be achieved overnight through legitimate means.

- BY Upul Sanjaya Weerasinghe

True wealth is built over time through sustained effort and prudent financial management. Despite this fundamental truth, fraudulent schemes promising rapid financial gains—such as pyramid schemes—continue to proliferate.

These deceptive ventures entice individuals with the illusion of quick wealth, yet they are far more destructive than they initially appears. In terms of the provisions of the Banking Act, participation in such schemes constitutes an offence, punishable by significant fines and imprisonment.

To safeguard one's hard-earned money and avoid falling victim to financial fraud, it is essential to understand the nature of pyramid schemes, the tactics used by promoters, and the legal ramifications of involvement.

This article provides a comprehensive analysis of these fraudulent schemes, their operational mechanisms, and the urgent need for collective effort to eradicate them. By fostering awareness, individuals and communities can play an active role in combating financial exploitation and ensuring a more secure economic landscape.

Understanding Pyramid Schemes and their Legal Implications in Sri Lanka

A pyramid scheme is a fraudulent financial arrangement in which earnings are primarily derived from recruiting new participants or from increasing the contributions made by the participants rather than from legitimate business activities. Under Section 83C of the Banking Act, No. 30 of 1988, any scheme exhibiting even one of these characteristics is considered illegal and subject to legal penalties.