A national campaign has been launched by consumer regulators around Australia to warn potential property investors about property spruikers who claim to be ‘wealth creators’ but are really just in it for themselves.
The ACCC is advising consumers not to attend these seminars, to be wary of any deals promising big returns with low risk and to get independent professional advice before becoming involved in property investments.
About property spruikers and investment seminars
Property investment promoters, or spruikers, typically promote a property investment ‘system’ or invite you to invest in a specific property development.
They may invite you to one of their ‘wealth creation’ seminars, often for free, with the promise of investment tips or opportunities.
Once at a seminar property spruikers may encourage you to pay to attend further investment courses or materials such as books and DVDs. They may also offer to provide, or arrange for a third party to provide, the finance to buy a property. Alternatively they may encourage you to invest in schemes such as:
During these seminars property spruikers often make claims about the successes of previous seminar attendees and the large profits that attendees can expect if they follow the ‘system’ or purchase the materials or investments being promoted.
Many consumers have suffered financial loss after relying on the unsubstantiated claims of a property spruiker. Consumer protection agencies across Australia have found many property spruikers cannot substantiate the impressive success stories and claims of profits they talk about at their seminars.
Know your consumer rights
Property spruikers must have reasonable grounds for any claims they make about the profitability of the schemes or investments that they promote. It is unlawful for property spruikers to:
- intentionally mislead or deceive you
- lead you to a wrong conclusion or impression
- give you a false impression
- leave out or hide important information (e.g. in fine-print disclaimers)
- make false or inaccurate claims.
Tips for dealing with property spruikers
- Do not rely on the advice that property spruikers provide.
- Do your own research before making a decision - seek independent financial and legal advice from licensed professionals with their own professional indemnity insurance.
- Be wary of high pressure sales tactics rushing you into decisions, signing contracts or paying fees (including discounts offered to seminar attendees who sign up on the day).
- Be suspicious of claims that the scheme is ‘government approved’ by frequent reference to the Australian Taxation Office (ATO) or Australian Securities & Investments Commission (ASIC).
- Don’t accept an offer of a personal loan or credit to help you pay the enrolment fees for training courses, or any strategy that puts your current home at risk by using the equity to borrow money to invest.
- Be on high alert if the property spruiker side-steps questions or downplays the risks and costs involved.
- Don’t buy an investment property that you haven’t seen, or off-the-plan properties that haven’t been built yet.