Central bank warns citizens of “risky” financial schemes intensified through social media

The National Bank of Georgia has warned citizens about risks associated with companies offering “inadequately high” market benefits in a short period of time, highlighting “active use” of social media through an “intensive" advertising campaign by the groups. 

Released earlier today, the statement also said the companies did not offer financial instruments to customers for earning money, instead asking users to subscribe to various services of the companies, introduce and share information containing advertising content for the online network, and invite new participants for the same purpose.

Naming the incorporation of “as many new members as possible” in the scheme and “indirect attraction” of their funds as the main goal of such companies, the Bank said the more people got involved, the more viable the scheme became.

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The statement also pointed out the financial schemes were "somewhat sustainable" only in the initial stage of their creation, while the process of attracting new participants to the scheme was ongoing.

Although many consumers are aware of the riskiness of the scheme, they often knowingly engage in these schemes in the hope that they will be able to earn the money they have invested before the scheme collapses”, the central bank said.

The NBG called on the public to look up information about the companies' reliability and activity and their solvency status before investing, to ensure a “reasonable and informed” decision.