By ADEBAYO OBAJEMU
In a brilliant expose’ the BBC Africa Eye has unmasked a sophisticated, hyped European pyramid scam exploiting Africans, others.
The said documentary, which has drawn the ire of many critics, who have condemned the highly hyped advertising gimmick of the scam, includes startling testimony from a woman in South Africa who expended her entire life savings on Crowd1 in the hope that she was buying “shares” in a “business” that would pay out a “salary.”
According to the BBC Africa Eye, which went undercover to expose the layers of deceit that was the con scheme, Crowd1 pyramid scam is run from Europe, and uses an elaborate advertising and media blitz and smartphones to cheat ordinary people across Africa, Asia, and Latin America.
What has become the sleaze has advertised itself as “the fastest growing crowd marketing company in the world” and mass-produces social media videos showing members buying new cars and enjoying luxury holidays. These gigantic social media videos, colourful and eye-catching, use nothing but a smartphone.
According to Crowd1 you can become a millionaire by promoting and selling a series of exciting digital products to your network. These claims, which have turned out to be spurious, and an elaborate deceit, according to BBC investigation, have managed to persuade thousands of people across Africa to turn over the 99 Euros that buys an entry-level membership to Crowd1.
In a ground-breaking investigative breakthrough spanning a six-month, behind the sophisticated marketing which masks a layer of lies, Crowd1 is marketing a range of specious products and empty promises to hide an obsolete pyramid scheme hinged on recruitment. The BBC had found that the recruitment of new members is heavily incentivised by Crowd1.
For instance, in its online webinars and events, members are advised to sign up their close circles: families, their Facebook friends, and the people they know from church. Successful recruiters earn a commission for bringing in new members, and – as with a classic pyramid scheme – for any additional people brought into Crowd1 by those recruited.
In the expose, the most important of Crowd1’s products is the “educational package” you have to get if you want to become a full member, but in reality this is effectively worthless, according to the BBC Africa Eye. Like the famed con artist Houdini, the scheme has duplicitously made fortune for a handful of European scammers, many of them Swedish.
Ironically, it has left thousands in huge debt and poverty in countries particularly in South Africa, Kenya and Nigeria. A woman in South Africa who has spent her entire life savings on Crowd1 said:
“My heart is broken,” she told the BBC, “because I wasted all my money that I could have used to buy a house. Now I am living in a shack, with no money. I don’t have an income or a business. I’m just in disbelief and I am ashamed.”
Africa Eye also talked to Samtos, a young man in Lagos, Nigeria, who avers that, when the Covid19 lockdown berthed in Nigeria, he was frustrated and bothered about how to earn an income to survive and was advised to join Crowd1 by a friend. Samtos told the BBC that the scammers are in Europe “enjoying everything they are gathering from poor people.”
Bature Ahmed, a doctoral student of criminology at Ahmadu Bello University, Zaria, told BusinessHallmark that “Crowd1 was able to fleece so many people, including others that ought to know better, because of its make-believe media blitz, a kind of Hollywood-like storm trooper kind of advertising full of glamour associated with Hollywood kings. Besides, “most people are more emotional than rational.”
But Crowd1 has gone into its defensive gear, noting that the covert operation by BBC was full of half truths. Crowd1 told the BBC that it is not a scam or a pyramid scheme and has not in any way broken any South African law.
It claims to be a legitimate network-marketing company that offers products to its members and fosters their ability to make money by marketing those products.
The organisation says it does not make money from recruitment, but only from these sales. Crowd1 also stressed that all its products are genuine. This denial came days after the BBC report came out.
Note that days after the report came to public glare about Crowd1 collapsing and moving away with its members’ money, the company was forced into issuing an official statement stating they are not a pyramid scheme in any way.
According to Crowd1, the major misunderstanding was a delay in some of its product launches due to the COVID-19 pandemic.
“Another part of BBC’s false accusations and allegations is that Crowd1 sells financial investment products to people in low-wage countries. That is not true. Crowd1 offers tools for people to make money in the form of marketing digital products. All remuneration is thus based on work effort and performance,” Crowd1 says in its statement.
The company took additional step to exonerate itself by recording a video with some of its executives to explain what their business is about.
Crowd1 like others before it prey on people’s gullibility, says Ahmed. According to him, what they do is coming in with the promise of making their prospective member/investors rich in a snap.
“This is what one company Crowd1 came in to do and has now left dozens of people stranded in losses and harder financial situations than they were in”, he says.
BBC Africa Eye team, was able to dig out the truth because they disguised themselves as interested members who were looking to get in on the get-rich-quick action.
The organization, according to Ahmed, has so far appeared successful and has made huge chunks of money for its European scammers who operated at the top. Now the chickens are coming home to roost.
According to BBC, Crowd1 had been giving promises to its potential investors, a supply of “educational material” allegedly supplied by a third-party firm Grithub. This educational pack, according to it, is then meant to provide one with insights on how to become a multimillionaire.
“For one Regina, who lives in South Africa, this was an opportunity to change her life and there was no way to turn it down. So, once Crowd 1 reached out, Regina’s mother chose to pay KES 30,000 for the package. They were then promised to start receiving payments of up to KES 100,000 as returns of their shareholding.
“They called them shares and told us that every three months we would get an amount in our accounts like a salary and they would send us clips every month of winners getting their money. People making around KES 100,000 a month,” Regina recalls, in testimony posted by the BBC.
The investigative team decided then “to get the first-hand experience by investing some KES 200,000 in an educational plan. This package was supposed to have earned them close to 700k over a couple of months. But when it came to the payday, they only received KES 300 of the money initially put in.”
To attract even more people, Crowd1 had been claiming to be in partnership with various companies. However, this tactic turned out to expose them even more as most of them turned to be in-operational.
This includes Affilgo, an online betting company and Miggster, a mobile gaming platform. As it turned out, these two just have websites that contain nothing but blurbs stolen from Wikipedia.