'The failure of formal credit institutions like banks to meet the actual needs of farmers in rural areas has seen many borrowers fall prey to private credit scheme frauds.
One such scheme, very popular in rural areas is the hui scheme - a revolving fund where money pooled from different contributors is lent to one of them, usually on a monthly basis, after drawing lots, or to the borrower who offers the highest dividend.
Dinh Ngoc Doanh from Nam Can District in the southern province of Ca Mau says he has lost a total of VND100 million (US$5,719) in two new schemes that he had joined after the organizers fled with money contributed by him and other members.
Typically, all contributors to the scheme are known to each other and the organizer who is responsible for collecting money from them and giving it to the person winning the periodic bid.
Several hui organizers in the Mekong Delta have abused the trust of contributors by cheating them of their money, while others have absconded after failing to operate the scheme when members stopped making their regular contribution.
Le Thi Dieu Hien of Cu Chon Island in Kien Giang Province's Kien Hai District said she had lost VND26.2 million ($1,498) after a hui organizer simply announced her inability to continue operating the scheme.
"I wanted to contribute to the scheme to get money to have my boat repaired and buy some fishing nets," she said. "I had contributed VND255,000 ($15) daily for 142 days."
She accused the organizer, Pham Kim Nga, of cheating, saying that the latter was one of the few rich people on the island who owns a jewelry shop on a nearby island.
Another victim of Nga's scheme, Truong Be Sau, said it was not the fault of other members because they had not failed to contribute money. "She has admitted she faked membership to deceive us."
Pham Thanh Dong of the Kien Hai District police said many hui schemes had failed on other district islands, including Nam Du and Hon Nghe.
He said most residents there were fishermen who wanted to earn more money on their savings through the hui schemes.
Farmer Nguyen Thi Ven of Giong Rieng District in Kien Giang Province said she had lost VND115 million ($6,577) in a scheme organized by Ngo Hong Tham.
She said she had borrowed loans on her house to contribute to the scheme, hoping to borrow a larger sum when her turn came in order to treat her nine-year-old child who suffers from a brain disease.
"My child died on the very day that I was informed the scheme collapsed."
Another victim, Nguyen Thi Nau, said her son worked as a housekeeper for the money to contribute to the scheme, from which she hoped to save enough for him to get married.
Abuse of trust
Police in Ca Mau Province have arrested Tran Kim Phung, a hui organizer, on charges of "swindling property" for involving in a scheme with dozens of participants from Song Doc Town in Tran Van Thoi District.
Earlier, about 34 people had reported to the police that they were defrauded to the tune of VND1.6 billion ($91,507) by Phung.
The victims said Phung offered them three monthly and two daily schemes with the possibility of high returns.
They said she had collected money from them through several bids which she said had been won by someone else.
After she fled, the contributors found there had been no winning bidders, and that she'd faked them to continue collecting money.
Dao Ngoc Be, an experienced hui organizer in Ca Mau Province's Dam Doi District, said victims of the frauds are those who totally trust the organizers.
"They can easily detect the fraud if they check the list of members or have regular exchanges with other members," she said.
WHAT IS HUI?
Hui is a group investment scheme where each participant takes turns to get the capital which is pooled periodically by all participants at fixed and equal amount.
For those not needing to borrow the money, the schemes offer the possibility of high returns.
Different to tontine, each contributor receives money only once through the periodic bids and the scheme ends after the last contributor receives the capital.
When the scheme operates, the money pooled is lent to one of the contributors typically after drawing lots, or to the person offering the highest dividend.
In the dividend bidding type, the winning member receives the amount less the dividend, which is shared among all members. It means their contribution for the next month will be reduced by their share of the dividend.
The organizer of the scheme, who takes a commission on each bid, is responsible for collecting the contributions, organizing the bidding process and giving money to the winner of each bid.
In Vietnam, the most popular periodic bidding term for hui schemes is a month.
Hui has been officially a legal investment scheme in Vietnam since 2006 when the government issued the first-ever decree on the matter.