There has been strong criticism in some circles over the use by pyramids and Ponzi schemes of monikers attached to longstanding traditional, informal savings associations that operate legally.
Names such as “Sou Sou”, “Box Hand” and “Partners” are now widely employed in the marketing of unlawful Ponzi and pyramid operations.
A sou-sou (also “susu”) is a type of informal savings club involving a small group of people within communities, families and workplaces who make contributions to a common fund with rotating disbursements of the pool of funds to members of the group. The concept is said to originate in West Africa and is in evidence throughout the Caribbean.
In countries such as Antigua and Barbuda and Guyana, it is also known as “Box Hand”. “Partner” (also “Paadna”) plans are based on the same system and is popular in Jamaica. It was adopted in the UK by members of the Jamaican and other West Indian diaspora in the 1950s and 60s as an informal savings scheme among the new immigrants.
Cooperatives under those names have long been popular in the Caribbean as a way of saving money without the use of banks. In legitimate versions, a fixed number of members contribute regularly and take turns receiving a payout on a rotating schedule.
But the fraudulent schemes operate differently. Some, known as pyramids, require new members to solicit money from family, friends, and others in order to fuel a system that enriches organisers but eventually collapses, leaving the great majority of participants with nothing.
Others, known as Ponzi schemes, do not necessarily require participants to recruit, but they use new contributions to pay off previous “investors,” and they too crash when the pool of new members dries up.
“It is really unfortunate that the current schemes, which are in no way similar to that of the original sou sou, is being given labels such as Drugs Sou Sou, and all these new financial arrangements are being seen as modifications of the sou sou,” said Zakiya Uzoma-Wadada, the leader of Trinidad and Tobago’s Emancipation Support Committee.
“The fact is that pyramids, circles and whatever other geometrical forms these current schemes take, are in no way similar to a sou sou,” she said.
FitzPatrick, president of US-based Pyramid Scheme Alert, argues that the modern model for pyramid and Ponzi schemes originated in the United States, but the frauds have expanded rapidly into other countries in recent years.
“They all relentlessly require more people. That’s the nature of a Ponzi/ pyramid scheme,” he said.
“As a consequence, they’re going into areas they didn’t bother with (in the past). So nowadays, they’re everywhere.”
They are also changing form. Previously, FitzPatrick said, they typically targeted participants who could afford a payment of hundreds or thousands of dollars, even if that meant tapping a credit card.
“In recent years, they have now gone into markets where people have no money and no credit, which could be immigrant communities, for example,” he said.
“And so, they have tailored these schemes for people who can put in as little as five or 10 bucks a week. … So, I kind of suspect that’s why there’s what appears to be a kind of an outbreak of it (in the Caribbean): It’s really part of a much larger pattern that’s occurring.”
Even within the Caribbean, the schemes have taken many forms in recent decades, though the false “sou sou” branding has become increasingly popular since the start of the pandemic.