Have you been tempted by promotions offering you lucrative incentives to join a so-called money making scheme where you would earn commission for recruiting more members? Sounds like an easy way to build your wealth and secure your financial future, but SCAMwatch is warning you to look out for potential pyramid schemes.
Pyramid selling schemes are deliberate scams designed to benefit the originators while taking advantage of later recruits. They operate on the basis that members pay a large upfront fee to join, but then receive commissions for recruiting new members. However, they inevitably collapse leaving most participants out of pocket. In Australia, it is against the law not only to promote a pyramid scheme, but even to participate in one.
On Friday 14 May 2010, the Australian Competition and Consumer Commission obtained interim court orders stopping three individuals from promoting an alleged pyramid selling scheme called TVI Express. The ACCC is concerned this venture is contravening the Trade Practices Act and causing harm to consumers.
The TVI Express scheme has been promoted on various websites including the site www.tviteamoz.com and the TVI Express Oz group on the site www.facebook.com. The ACCC also understands that the promoters had planned to hold presentations across Australia and New Zealand this week to promote the scheme.
People who wish to participate in the scheme are required to pay a membership fee of $330. Once an individual has paid the $330, they receive a 'travel voucher' and the opportunity to receive commission payments for recruiting other people into the scheme.
The ACCC will now prepare the matter for final hearing. The ACCC will be seeking orders declaring that the individuals engaged in contraventions of the Trade Practices Act 1974 and injunctions restraining them from engaging in similar conduct in the future. The ACCC will also be seeking civil pecuniary penalties against the individuals.
Protect yourself – do your homework!
Beware of investment schemes that claim to guarantee income or winnings, particularly where you need to recruit new members to make money.
Beware of investment schemes that don’t involve the sale of genuine products or services of value and make money only by recruiting new members.
Remember that family members and friends may try to involve you in a scam without realising that it is a scam: you should seek independent advice.
Do not let anyone pressure you into making decisions about money or investments: always get independent financial advice (for example, from a lawyer, financial planner or accountant) before you make a decision.
Pyramid schemes often look like legitimate multi-level marketing schemes. If you believe that the business opportunity you are investigating could be a legitimate multi-level marketing scheme, make sure you get independent advice before signing up or investing any money.
You can also report this matter to the ACCC Infocentre on 1300 302 502 or though the report a scam page on the SCAMwatch website.