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State Bank warns against investment fraud

ISLAMABAD: The State Bank of Pakistan has cautioned people not to be misled by advertisements inviting investments in lucrative schemes and businesses promising high rates of return. “Some firms have been offering higher returns to customers and do make initial payments but after collecting large sums of money from the customers, they disappear,” the State Bank has warned.

“Through advertisements, some individuals, firms or companies claim to be doing certain business or working on lucrative projects and invite investments offering high rates of return,” it added. Another tactic used by these firms was Multi-level Marketing and Pyramid schemes, under which new customers were required to bring more members in a geometrical progression.

“The process of membership continues and reaches a stage of saturation after which inflow of new members halts, which results ultimately in collapse of the whole structure,” it said and added that only a few people on top of the pyramid make money and the others loose their shares. The State Bank stated that no one could invite and accept deposits or offer loans to people through advertisements, unless duly authorised under the law. app

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