Liquidator chases e-subscribers

, posted: 8-Jul-2003 21:40

A multilevel marketing plan, described last year by the Commerce Commission as in breach of the Fair Trading Act and possibly an illegal pyramid scheme, is in liquidation - and its liquidator is chasing subscribers for money.

About 12,900 subscribers to defunct Auckland-based Cash Evolution have received an email from liquidator Staples Rodway advising that their credit cards could be debited to pay for "subscription services prior to the

The liquidator's first report lists the subscribers' debt as the largest asset, worth $2.3 million out of total assets of $2.4 million. Liabilities are listed as $627,867, most of it owed to unsecured creditors.

Staples Rodway's Gareth Hoole said he had a "statutory obligation as an officer of the court to recover funds for the creditors". The email to subscribers is published on www.

Hoole said the credit cards had not yet been debited. He said the firm took legal opinion on the matter, and were advised to give debtors the chance to say whether they were liable for any charges.

Cash Evolution's scheme asked subscribers for a joining fee of US$25 ($41.75) and monthly subscriptions of US$25 in return for "education" and "investment modules". To make money, subscribers had to recruit more subscribers.

The scheme was listed on the "Scam Watch" section of the Consumer Affairs Ministry website last year.

About a third of the alleged debtors have responded disputing the charges, saying they did not receive the services paid for, or couldn't cancel their subscriptions as they were unable to access the website to do so.

Hoole said that he "was in no mind to charge anyone who doesn't owe money" and expressed surprise at the large number of people disputing the charges. Consumers Institute senior research writer David Hindley says that "in a narrow legal perspective, liquidators are probably within their rights to collect money for the subscriptions".

Hindley encouraged people to act quickly if they wanted to dispute the charges, saying customers disputing credit card transactions often had only a month or less to obtain charge-backs.

Deborah Battell, director of fair trading at the Commerce Commission, said that "based on the information we have received, the liquidator's actions do not appear to raise issues under the Fair Trading Act".

"The commission would, however, advise subscribers to satisfy themselves that they do in fact owe the amount of money demanded by the liquidator, and that they have received the goods and services they subscribed to."

Web developer Devolution, which had not been paid for website work, sought to wind up Cash Evolution through a statutory demand issued in the High Court. But Cash Evolution directors Craige Mayo and David McQuoid put the scheme into voluntary liquidation on May 19.

Cash Evolution has now "merged" with Total Marketing Live, which promises "access to live marketing training, forums, e-learning courses and extensive marketing resources", as well as "the most lucrative compensation plan on the net" where subscribers recruit other people into the scheme.

The monthly subscription charge is US$25, payable either via credit card or "Stormpay", an internet payment
processing service in Dominica, West Indies.

Some 4000 Cash Evolution subscribers are now in Total Marketing Live, according to Hoole, who thought the transfer "had some economic value" and was now investigating whether some of that transaction could be returned to creditors.

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