Don’t get caught up in a pyramid scheme

This announcement is for: 
Business / companyConsumer

Consumer Protection is reminding South West businesses of the consequences of taking part in or promoting pyramid schemes following a call from a local business which had been approached to join such a scheme.

Pyramid-type frauds turn over cash when money from new victims is used to pay those who set up the scheme or who got in early.

The following characteristics can be used to help identify a pyramid scheme:

  • unrealistic claims in regard to future profits
  • often do not  involve the genuine supply of any goods or services by or among members
  • the sales and/or promotional material push recruitment very hard

Consumer Protection’s South West Regional Coordinator Debbie Butler is warning businesses not to be fooled by promoters who sometimes use marketing strategies to make their pyramid schemes look like legitimate products or services.

“Not to be confused with a genuine multi-level marketing company but any ‘business opportunity’ that requires you to pay money to join and heavily promotes the benefits of recruiting others as a significant cash flow, is likely to be a pyramid scheme,” Ms Butler said.

“Under Australian Consumer Law, pyramid schemes are illegal and there can be fines of up to $220,000 for anyone who takes part in the scheme or encourages other people to join.

“We encourage anyone who is approached by a pyramid scheme promoter to contact us or seek advice from the Small Business Development Corporation immediately.”

If you suspect a ‘business opportunity’ put to you is really a pyramid scheme contact WA ScamNet by email - wascamnet@commerce.wa.gov.au or phone the Consumer Protection Advice Line on 1300 30 40 54.

END OF RELEASE

Media contact (Consumer Protection)

Consumer Protection
Media release
12 Mar 2015

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