Thai shared money group? What is it?

[Global Guy]

Okay, I thought I heard it all but here's a new one that I cannot get my Thai gf to explain enough to me (and she's pretty fluent in English).

 

What is this thing the Thais have that is like a "shared money group?" The best I could get of a description is that the people in the group all pool their money and when someone needs some, they borrow it and pay it back with interest and the group shares in the interest profits. Has anyone encountered this concept and can explain it more?  She said it's all legal. I thought it was a loansharking thing but she said no. But who knows.

 

My gf's group has had four recent "thefts" of money from the group and she's going nuts. She's in charge of the group so somehow she's losing the most money. I don't get how she got scammed so  much and she can't explain it to me. Big surprise there.

 

She's met with an attorney but I know they are going to rip her off too. I've dealt with attorneys here and they are a bunch of thieves as well.

 

Anyway, any more details you could add would be helpful. Thanks!

[Inn Between]

It's probably very similar to a Caribbean susu were everybody pays an agreed amount every month, but if you miss a number of payments you are kicked out. Google or Wiki susu loans to get a better idea. They are very popular among Caribbean culture for people without access to formal lending routes.  

Edited August 11, 2016 by Inn Between

[lemonjelly]

54 minutes ago, Inn Between said:

It's probably very similar to a Caribbean susu were everybody pays an agreed amount every month, but if you miss a number of payments you are kicked out. Google or Wiki susu loans to get a better idea. They are very popular among Caribbean culture for people without access to formal lending routes.  

Yep, it's called  " kar  share" here, also if you want your cash back before your due, you have to pay extra interest. I've banned my missus from doing it again. Bloody nightmare, plus the risk of organisers doing a runner with the cash, not uncommon.

[lopburi3]

Police will help obtain money if 3 people approach them with complaint so I guess it is not too illegal.  Very common savings system among working folk - it is a set amount for a set period of time with option to obtain full amount at any time if you highest bidder (extra payment amount until end).  So big risk of those taking money early doing a runner (they don't have money to make the higher payments or planned to take the money and run).  Works for small close groups however as it provides interest in the higher payments made by those taking money early and a chance for people to have cheap loan source to allow bigger purchase than they would normally afford.  

[cms22]

One step from gambling. Steer well clear if you can.

[rheinwiese]

Money Game

It’s called “การเล่นแชร์” (gaan len share), literally means “play share”, somebody said it's originally from Chinese immigrants in Thailand. In old days they used this method for funding their businesses, since it's widely accepted and joined in all levels of Thai people, so we had the specific law for Gaan Len Share almost 20 years ago. Many business people use this funding to provide liquidity aside from their bank loans.

Gaan Len Share is different from แชร์ลูกโซ่ (châe lôok sôh), literally means “share link (chain)” which is illegal, fraud, and has been developed in the form of direct marketing - Multi Level Marketing (MLM) or Network Marketing or disguised in some franchise businesses.

Gaan Len Share - the person who sets up and manages this game is called “ท้าวแชร์” (Taao Share – ruler of the group or game), วงแชร์ (wong share) 1 วง (wong or group) can have x มือ (meu – hand or number of participants). Participant can join the group more than 1 meu, Taao Share can manage more than 1 wong or group. Taao Share should have good reputation of trustworthiness to attract people to join these shares. 

For example: this wong share has 10 meu but only 6 participants as some of them join more than 1 meu.

2 types of participant in this game, one who needs money and one wants the return (interest) which is supposed to be higher than depositing in the bank. The details in managing this kind of funding vary, mostly for their convenience and security of their money. Majority of this participant is always those who need money, that’s why the interest is very high.

For example: 5 participants (A, B, C, D, E) for 1 wong with 5 meu, 10,000 baht of each meu, A is Taao Share, they agree the day of เปียร์แชร์ (Bpia Share) is the first day of the month. 

First month: A as the Taao Share, with privilege for not paying the interest and will be the first person to get money from this wong. A receives 40,000 baht from B, C, D and E, then A gives 4 cheques 10,000 each in return to B, C, D, E 

Second month: C and D need money, both of them want to Bpia Share, at the day 1st, they write the number of interest to A, to bid this share, supposing C offers higher interest – 1,000 baht. C will receive from B, D and E 9,000 baht each, totaling 27,000 + 10,000 (from A’s cheque) = 37,000 baht, then C gives 3 cheques 10,000 baht each to B, D, E

Third month: B and D want to Bpia Share, D offers higher interest – 1,200 baht. D will receive from B and E 8,800 baht each, totaling 17,600 + 20,000 (from A and C’s cheque) = 37,600 baht.
D gives 2 cheques 10,000 baht each to B and E

Fourth month: B offers the interest 600 baht. B receives from E 9,400 baht + 30,000 baht from 3 cheques (A, C, D) = 39,400 baht. B gives 1 cheque 10,000 baht to E

E has 4 cheques 10,000 baht each, total interest earned 2,800 baht.

A – receives 40,000 baht, gives to B, C, D, E for 10,000 each
B – receives 39,400 baht, gives to A (10,000) + C (9,000) + D (8,800) + E (10,000) = 37,800 (B earns 1,600) 
C – receives 37,000 baht, gives to A (10,000) + B (10,000) + D (10,000) + E (10,000) = 40,000 (C pays interest 3,000)
D – receives 37,600 baht, gives to A (10,000) + B (10,000) + C (9,000) + E (10,000) = 39,000 (D pays interest 1,400)
E – receives 40,000 baht, gives to A (10,000) + B (9,400) + C (9,000) + D (8,800) = 37,200 (E earns 2,800)

It is a loose example from a person who used to play this game, roughly to understand how it works. There are many practices of Gaan Len Share, this kind of funding was popular among business people before the economic crisis in 1997, the amount of money circulated more than 100 million baht in some groups, millions of each meu. But many Taao Share disappeared after receiving those money in the first month, they set up many wongs and their cheques bounced.

High risk, High return, Convenience, Easily to access big amount of money. 

[recom273]

Against my better judgement the wife is in a "syndicate" at her work, 15 people put in 1000B and they draw to see who gets the 14K but then every few months she gets 1000B interest.

 

I guess to be an effective syndicate supervisor you need to be running a few rings and be loansharking to your family and neighborhood, otherwise where does the interest come from ??

 

its a strange phenomenon to me, our savings from combined healthy wage grow every month, we always have a nice disposable income and lifestyle - yet peer pressure dictates that she needs to paricipate in these syndicates. As long as it stays at 1000B a month, I just have to let it ride. It stops her workmates bothering us for loans.

[catman20]

A CON ????????????

[colinneil]

Crazy idea except for the person running things.

My ex-wife was involved in more than 1 of these stupid schemes.

Problems started when organizers daughter got the money this month, then her niece the next.

Now more than 50000 baht in the pot, organizer disappears

[KittenKong]

Thais and money. Babies and candy. Is there any difference?

[1FinickyOne]

The ones that I have seen that sound similar are where everyone shows some nice profits on paper for a while, they get excited, bring in more friends, and it mushrooms for a while then one day, it implodes and ALL the money is gone. 

 

Always sounds like a pyramid type scam... 

 

Nice people and their friends are usually the big losers... 

[boonchu]

My understanding is that a group of people (usually well known to each other)agree to put a certain amount of cash into the share, they then call for bids of how much interest or fixed amount is to be put back by the one who bids the highest. A new bid is called each month. the last person collects the most interest, each person collects a part of the interest according to which hand in the share they win with their bid.

[Tchooptip]

In my wife family they do that with a few tens of thousands ฿ maybe 50,000 only for the brother 3 sisters 2 parents and one granddaughter, if one of them has a urgent need  he can asked for maybe 10, 20,000฿ for instance and then give it back without interest. It seems it is working for more than 20 years and every one always paid back, I've just learned it 2 weeks ago because my DIL went a few days to Bangkok for a new job for her husband,  they had not enough money my wife explained to me they received 20,000฿ from this "family pot" 

[Peterw42]

Lots of variations on these groups. In its simplest form, a chunk of money moves around, when its your turn with the money, you use it to get a credit card, apply for a car loan, show others you have money etc. If you see the way thai people market their enterprise on facebook etc. The pictures of them, the product (slimming pills etc) and a pile of money. Its perceived wealth by association. You flash the money around to friends, family, business partners and they want to be in on the action. They buy your product, invest in your business venture etc. Then you give the chunk of money to the next person.

Its a little like the girl in the bikini holding the acme hammer drill. If I brought an acme hammer drill, I would meet girls in bikinis.

 

[SOTIRIOS]

...sounds like she has you by the b*lls.....

 

...what do you think comes next.....???

 

...good luck buddy.....

 

...oh sorry....your gf is 'different'.......

[Khon Kaen Dave]

We had a similar thing going at my school.There were 10 of us.We each had a number 1-10 which we kept.We put 1.000 baht from our salaries in a biscuit box every month.Also on that pay day,a number was drawn from the box,and the owner of the number recieved 9.000 baht plus his/her stake back for that month.The number was then thrown away,and we would do the some thing on the payday until all the numbers were used up and then we would start again.It just meant that every month one of us got the money.It wasn't gambling because one of us was always a cert winner,and the next month it would be someone different until we had all got a little bonus.

I thought it was a good idea.

[carlyai]

Is this similar to what they do for funerals?

 

There have been a few funerals in my area in Issan.

 

Seems like everyone in the village pay in money (not sure weekly or monthly), then when someone from your family dies, at the funeral, the family get ( 20, 30, 50) thousand baht.

 

 

[F4UCorsair]

It seems this is a risky enterprise......at best.

Borrowers will be those who can't borrow elsewhere and paying higher interest, so high risk.  Also, loans are probably unsecured because of the additional cost, and that's if the borrower has any assets.

Sounds like a recipe for burning cash to me.

You had me worried Khon Kaen Dave, worried about what you were smoking!

Edited August 12, 2016 by F4UCorsair
typo

[smotherb]

rheinwiese offered a good explanation of a Thai variation of these schemes; Khon Kaen Dave, recom273, and  Tchooptip have offered other variations. In Tchooptip's or KKD's version, things may work well, but quite frankly, I have seen families and close associates turn on each other over money; haven't you? I have seen them in Vietnam, the PI and in the States within the Vietnamese-American community. It appears most of the schemes derive from Chinese money groups popularized by the Overseas Chinese; such as the Tong groups. Ideally, they are a type of Credit Union, only with no formal oversight or regulation; more commonly they are a pyramid- or Ponzi-type scheme. There are as many variations as there are sick-buffalo stories and most are just as trustworthy.

 

1 hour ago, Khon Kaen Dave said:

 

[smotherb]

1 hour ago, Khon Kaen Dave said:

We had a similar thing going at my school.There were 10 of us.We each had a number 1-10 which we kept.We put 1.000 baht from our salaries in a biscuit box every month.Also on that pay day,a number was drawn from the box,and the owner of the number recieved 9.000 baht plus his/her stake back for that month.The number was then thrown away,and we would do the some thing on the payday until all the numbers were used up and then we would start again.It just meant that every month one of us got the money.It wasn't gambling because one of us was always a cert winner,and the next month it would be someone different until we had all got a little bonus.

I thought it was a good idea.

Yeah, it seems a money scheme for those who cannot save. If you put away B1k on your own every month, every ten months you would have B10k--which is pretty much what it appears your group is promised.

[SaintLouisBlues]

Yes it's some sort of mutual saving society although the way my boyfriend (well, one of them) explained it the members can borrow, interest-free, from the "pot". It's no different conceptually from any other sort of not-for-profit mutusl although there are no rules about enforcement, guarantees of repayment etc. I'm not even sure how it gets wound up and the funds disbursed to the members (if anything is left over after the borrowers have done a runner).

[The Fat Controller]

Get it wound up as soon as you can, it can now only get worse.

I know of one group that ended with the suicide of the "treasurer" as she had been skimming off the money to pay for family issues and when the time came to pay out to another member, there was not enough left in the pot.

Millions were missing and the grief is still ongoing several years later, it never got investigated, so I think most of the schemes are verging on the illegal.

 

Edited August 12, 2016 by The Fat Controller

[LivinLOS]

People need to understand that only a decade or two ago Thailands banking system didnt really offer poor people credit and money lenders rates are exhorbitant bordering on criminal.. This system combines a kind of loan with a kind of insurance.. 

The communal bank (games) systems give people access to 1) the ability to fund a business 2) an insurance against sudden cash need (accident or illness) 3) a forced monthly savings plan and 4) a possible interest payment. 

 

Those who need money, pay the interest.. Those who are prudent, and end up not needing the money, gain interest from those who do. 

 

Its a simple and effective way of achieving multiple goals and works if the group has trust. In (past) village based communities the pressure to conform to the system is huge, anyone who rips off their friends is ostracized from friendship by the rest of the group, people didnt travel and move as much and this peer pressure was effective. Practice the same system with a bunch of transient bar girls who have few ties and its is never going to work. 

 

My wife does this with her aunties family in the village, usually one of the aunties is the pot holder, and it also gives them a social aspect, they meet, yabber about the pot, yabber about plans for the dividend, yabber about what the savings to be used for, or yabber about who borrowed the pot for what reason.. They have done small pots shorter term or longer ones with larger amounts involved.. Not once has the pot gone astray with family in charge. 

[swerver]

20 hours ago, lemonjelly said:

Yep, it's called  " kar  share" here, also if you want your cash back before your due, you have to pay extra interest. I've banned my missus from doing it again. Bloody nightmare, plus the risk of organisers doing a runner with the cash, not uncommon.

 

CORRECT - doing a runner with the money.

A security guard of one of the well known golf courses didn't come to work one morning an has never been seen again, neither has the two million Thai Baht he had control of.

[gregk0543]

4 hours ago, Khon Kaen Dave said:

We had a similar thing going at my school.There were 10 of us.We each had a number 1-10 which we kept.We put 1.000 baht from our salaries in a biscuit box every month.Also on that pay day,a number was drawn from the box,and the owner of the number recieved 9.000 baht plus his/her stake back for that month.The number was then thrown away,and we would do the some thing on the payday until all the numbers were used up and then we would start again.It just meant that every month one of us got the money.It wasn't gambling because one of us was always a cert winner,and the next month it would be someone different until we had all got a little bonus.

I thought it was a good idea.

 

This is the basic principle on which they all work. If all the members are friends and can be trusted it works. Its sort of like a savings program.

 

I have been been asked to join them with larger amounts like 10 people at US $1000 per month.

Instead of drawing the numbers out of a hat the person who wishes to take the money has to make a bid stating interest they will pay.

In one rotation of 10 months each person pays interest except if you are the last person of the 10.

So during the process you get the money plus the interest on the money you are each putting in each month.

Each person takes a turn.  

 

If someone cant pay for one month then it is a problem for the organiser they have to cover and chase for that money.

 

If someone takes the money and cant pay after that then that is lost.

 

So it is just like a bank and has the same risks.

 

For me I have better things to do with my time.

[eastendanto]

My wife was a participant in one run by the owner of a salon where she lived at the time, and it mostly consisted of girls who frequented the salon. Very much on run on the principle the OP posted, each member puts an amount in each month for a preset amount of time (this one was 12 months I think) and if they borrow they pay a percentage on top of the amount borrowed. At the end of the 12 months the money received inc interest is divid'd up and shared amongst the members. My SIL says it's also pretty common scheme run by people in factories, typically by a manager or or head of dept etc and the workers becoming members.... My wife did pretty well out of it....However due to moving to UK not practical to participate further. Seems to be a fairly common practice in Thailand. 

[Khon Kaen Dave]

The thing we did,did not contain any interest at all,it was purely a way of everyone of us getting a few extra baht one month out of ten.It was good fun wondering whose turn it would be that month.It worked very well for 3 years and we never had arguments or problems.I wouldn't get involved in anything where inerest was involved,thats a sure way of losing friends.Ours was just for fun.

[khundon]

"What is it?" It's <deleted>****g stupid, that's what it is and so is anyone who joins it. 

[Dene16]

I have taken part in a couple of these and many Thai's also use them 

Basically a syndicate of people  each place money into the pot each month  

Each person has a chance to borrow the money from this pot at a very high interest rate (which they all nearly do)

At the end of the term (normally one year) everyone gets there money back that they have paid each month

Mine was done through GF's brother in Bangkok at his workplace. 

I was told that if anyone ran off with the money without paying it back the boss of the company (obviously he makes money from it) would guarantee i get my money back but no interest 

i paid £440 over 11 months and received £600  back as i did not borrow the money. That is 36 percent interest 

It is strange how you borrow the money because each person has to wait their turn. surprise, surprise i was last in line

My GF started to get worried near the end in case someone ran off with the money but each time no problem 

 

[recom273]

On August 12, 2016 at 1:16 PM, smotherb said:

Yeah, it seems a money scheme for those who cannot save. If you put away B1k on your own every month, every ten months you would have B10k--which is pretty much what it appears your group is promised.

 

This is so true, Can you call my missus  and explain this because it doesn't seem to have much effect when it comes from me.

 

Sometimes you have to sneakily pick your battles - if she spends her time and Her thousand baht in this scheme at least she's not thinking about setting up her sister in business as a som tam seller.