Gazans fall victim to pyramid schemes

GAZA CITY, Gaza Strip — To escape unemployment and poverty, which have reached record levels in the Gaza Strip, many young men and women have resorted to pyramid schemes in an effort to make money. However, they have become victims of fraud and theft from several bogus online companies.

The Ministry of Economy in the Gaza Strip issued a decision Jan. 25, banning the sale, purchase, trade, marketing or advertising of any product or service through pyramid marketing via any electronic or nonelectronic method. The ministry warned that whoever violates the decision risks legal accountability.

The ministry’s decision came a few days after reports of a Gazan woman who committed a fraudulent operation against a large number of citizens in the Gaza Strip. She then fled to Turkey after having collected nearly $2 million from the victims and deluded them that she ran a pyramid marketing company.

Network marketing or pyramid schemes are considered a bogus commercial activity on the internet that not only affects the victim, but also his surrounding circle. The victim buys goods in large amounts from the so-called business owner, with the aim of investing in the trade and making profits that are usually not real.

Muhammad al-Najjar, 27, from Khan Yunis, one of the victims who lost their money in pyramid marketing, told Al-Monitor, “One of my trusted friends spoke to me and told me that he had a way to earn easy money. All that was required of me was to invest some money in e-commerce.”

He said, “Since I am unemployed and have no source of income, I accepted the offer because I trusted him, and I put all my savings [$1,700] into e-commerce. He assured me that I would get a profit estimated at 25% of the amount I invested in one month.”

Najjar noted, “Indeed, after a month I made 25%, but I was not able to withdraw the profit or even part of the capital. My friend explained to me that for the work to continue the capital must remain intact, and that I should not withdraw it. He said I could benefit from the profit and withdraw it after I brought two of my relatives to invest in the same trade.”

He added, “Then I realized that I was the victim of fraud and theft, and when I urged my friend to withdraw the money I invested, he assured me that the website he sent the money to — which is somewhat similar to the Alibaba website — refused to return the money.”

Suzan al-Assar, 34, invested with her husband $3,000 in a pyramid marketing company. She also convinced many of her relatives to invest after seeing the profits rise, and upon the insistence of those in charge in order to double her profits.

She told Al-Monitor that she submitted a report to the police after confirming that she, her husband and her relatives were victims of fraud. She said she is now having problems with her relatives whom she persuaded to put their money up for investment.

Gaza police spokesman Ayman al-Batniji told Al-Monitor that the Cybercrime Unit in the Ministry of Interior has received many complaints from citizens about fraud and scams under the name of pyramid marketing, and that these cases are being investigated by the competent authorities.

He explained that the procedures followed in these cases include issuing a prosecutor’s order to arrest the suspect, refer him for investigation, put him to trial and try to return the money to the victims. He pointed out that only a few of those who defrauded citizens managed to escape from the Gaza Strip.

Batniji said the police does not have an accurate number of those who have been defrauded and whose money was stolen, because some have not filed a complaint with the police. They either kept mum about it or pursued the person who defrauded them and collected what they could from the money they had lost, he noted.

Gazan economist Osama Nofal told Al-Monitor that the first reason behind falling victim to pyramid marketing stems from the greed to accumulate financial wealth in exchange for promoting goods. The majority of participants do not even know that they are victims of fraud.

He said that any party, or even governments, face difficulties in tracking down and monitoring pyramid schemes. 

Nofal warned that fraudulent pyramid marketing has caused many disputes between Palestinian families in the Gaza Strip and has damaged social ties. Some family members took part in pyramid marketing without knowing that it was fraud, and they went after the person who told them about the scheme.

Muhammad Abu Qamar, economic expert at Al-Resala newspaper, told Al-Monitor that the greed and ignorance of the majority of the victims is the main reason for the spread of this phenomenon.

He blamed the Gaza government and the Palestinian Legislative Council for the spread of fraudulent pyramid marketing in the Gaza Strip, due to their failure to put in place mechanisms to combat it despite many warnings about the schemes.