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Monday, 30 July, 2001, 16:03 GMT 17:03 UK
Women warned of 'nasty' pyramid con
Women Empowering Women pyramid investment scheme
Those at the top of the pyramid can receive rich rewards
The government has warned women to steer clear of an all-female pyramid investment scheme, which is sweeping the UK.

This is a nasty scheme which preys on vulnerable women, many of whom can least afford to lose their hard-earned savings

Trade and Industry Secretary Patricia Hewitt
The Department of Trade and Industry (DTI) is investigating ways to outlaw the so-called Woman Empowering Women scheme, which is estimated to have attracted 150,000 participants.

Trade and Industry Secretary Patricia Hewitt said: "This is a nasty scheme which preys on vulnerable women, many of whom can least afford to lose their hard-earned savings."

Pyramid investment schemes, sometimes called "gifting" schemes, promise big returns for a modest outlay.

Heavy losses

But many people who join up are left badly out of pocket as the schemes run out of new members and fold.

Four years ago the Albanian government was brought down when a series of pyramid schemes collapsed, ruining tens of thousands of families across the country.

The "women empowering women" scheme originated in America and came to Britain through the Isle of Wight, where hundreds of people incurred heavy losses.

So far, it is believed to have gripped South Wales, Glasgow, Oldham, Wigan, Bermondsey, Croydon, Somerset, Chelsea and Derbyshire.

Emotional support

For an initial outlay of 3,000 a women can buy a 'heart' or membership of a scheme.

Women taking part in pyramid investment scheme
Schemes spread through friends and family

Each new member must recruit eight new members.

As existing members rise up though the pyramid, they receive the membership fees of new participants, with the promise of a total payback of 24,000 within a few weeks if all participants involved recruit enough new members.

Membership is by invitation only, from friends or family.

Emotional support, delivered through a weekly meeting or telephone conference call, is also fundamental to the pyramid.

The scheme promises to give women an independent source of cash and help them to pay off credit card bills and other debts.

Flagging membership

Those who sign up in the initial phase can make substantial amounts of cash.

But by their very nature, pyramid schemes soon run out of new people to recruit, and as new membership fees run dry people lower down the chain do not receive the promised returns.

By the time of the scheme's inevitable collapse, thousands of women can be left out of pocket.

There have been reports from some areas of participants losing their houses as a result of involvement in this latest wave of schemes.

A DTI spokesman said it was looking at "all possibilities for tackling this issue."

Because participants "gift" the money to each other, trading standards legislation finds it difficult to outlaw the schemes.

In the United States, similar pyramid schemes could only be stopped by using arcane clauses in the lottery legislation.

See also:

01 May 01 | Business
Isle of Wight's get-rich fiasco
06 May 00 | From Our Own Correspondent
Picking up the pieces in Albania
29 Apr 98 | Asia-Pacific
Rioting after China's pyramid ban
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