NSW Fair Trading Commissioner Rod Stowe is warning promoters of property investment schemes to operate legally or face sanctions.
Australian Consumer Law regulators from around Australia have worked together to examine the practices of a number of promoters.
Mr Stowe said a common theme was consumers being misled about the financial benefits of buying into a particular scheme.
“Regulators across Australia have initiated court action to stop promoters who promise financial benefits they cannot deliver on or who fail to tell people about their cooling-off rights to get out of a service they were pressured into buying at a ‘free’ seminar,” he said.
Regulators closely examined the activities of traders between 2013 and 2015. Twenty traders received legal notices requiring them to substantiate claims made in advertisements and at their seminars.
This prompted legal action against at least 10 entities and their associates:
In addition, legally-enforceable undertakings were given to regulators by seven traders (including Rick Otton and Dymphna Boholt) who promised they would modify their behaviour, including changing their advertising and to stop making misrepresentations. A total of 67 education/warning letters were also issued.
“We are sending the message to the industry that they have to act fairly with consumers or face action by consumer law regulators using the Australian Consumer Law,” the Commissioner said.
“Failure to do so will render the promoter liable for civil and criminal penalties, in some instances up to $1.1 million for a corporation and $220,000 for an individual.”
Things to be wary of:
If, in conjunction with the sale of goods, services or real estate, the promoters engage in credit or financial services including financial advice in relation to self-managed super funds, they need to operate within the laws that cover the provision of credit or financial advice, administered by the Australian Securities and Investments Commission.
ASIC has recently taken a number of actions against entities for providing advice on self-managed super funds without being licensed and for misconduct under the Australian Consumer Law and consumer credit laws.
Some scheme promoters also need to be licensed by state agencies to promote property sales.