Siren songs of easy cash tempt unwary

, posted: 1-Jan-2003 21:05

(originally published in the New Zealand Herald Tuesday October 15, 2002)

An online "report of third party due diligence" posted by associate Mark Joyner outlines the scheme's benefits and tries to show that it is legal.

The report says prominent New Zealand law firm Lowndes Jordan is acting for Cashevolution and says it has set up an email "autoresponder" to confirm this - although the message from the autoresponder makes it clear that the law firm does not endorse, promote or take responsibility for any material or services. also employs a public relations agency, Firebrand Communications in Auckland, yet the scheme does not list its office telephone numbers anywhere.

Although Mayo says that does not market the scheme itself, affiliates do.

Some have been caught spamming, and a quick search through Google reveals that Cashevolution is being sold to punters in the same way as internet pyramid schemes.

Deborah Battell, director of fair trading at the Commerce Commission, says the commission cannot comment on active investigations.

But, she says, it tries to move as quickly as possible on schemes that appear to breach the Fair Trading Act.

Battell says the commission is able to take out temporary injunctions against the operation and promotion of
schemes. She says internet-based scams have seen a "real resurgence lately".

Battell encourages people to be careful and to be sceptical about any emailed offers. She says any received should be logged at the Ministry of Consumer Affairs website.

Ironically, says Battell, the internet is a good way to vet scams.

"Type in the name of the scheme into a search engine. More often than not, you'll find messages from people who have already been taken in by the scheme, and want to warn others."

David Russell, chief executive of the Consumers' Institute, says internet scams represent "nothing that we haven't come across before, in different guises".

He says the schemes target two kinds of people - those with a psychological disposition to believe that they can make money quickly and easily, and "unsophisticated punters", who are often "poor, desperate and innocent".

"The internet is merely a very efficient conduit for the schemes," says Russell. "It does not give rise to them."

Because multi-level marketing in itself is not illegal in New Zealand, provided legitimate products or services are being sold, the Commerce Commission cannot issue a blanket ban on such schemes.

Sophisticated operators, adept at masking the pyramid selling nature of their schemes, make the commission's work hard and time-consuming.

Russell says the commission "will never be able to shut them all down". Operators simply change how the schemes are run, or quickly start up new ones if they are investigated. The commission cannot always protect people against greed that short-circuits common sense and sees millions hand over their cash to pyramid schemes. That sad fact is the reason we will see many more such cases.

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