Friday 30 March 2007 07-81 Under embargo until 12.01am, Sunday 1 April 2007 LAWFUEL – The Australian Securities and Investments Commission (ASIC) has launched a fake investment website on April Fools’ Day to alert investors about the dangers of investment opportunities on the Internet. The site – located at www.electroharvest.com – mirrors the tactics of stock market con artists, touting an investment opportunity offering ‘exceptional risk-free returns’.
Visitors are urged to invest in a private equity ‘company’ promoting an electricity device that ‘recycles ambient electromagnetic radiation back into usable household energy’, promising to cut ordinary Australians’ power bills by 37 per cent. ASIC Executive Director of Consumer Protection, Mr Greg Tanzer, said ASIC recognised how difficult it was for consumers to differentiate between genuine and scam investment opportunities. While many scam websites promoted seemingly outrageous products or services, they were otherwise made to look credible and authoritative. ‘A fake investment website is an effective way of educating consumers who are searching the web for investment opportunities.
Hopefully, by using ‘real world’ examples rather than simply issuing warnings, we can more effectively demonstrate how easy it is to fall prey to an online investment scam’, Mr Tanzer said. ‘In this instance, anyone who tries to go ahead and invest in one of the investment options promoted is led to a page that warns how easily they could’ve been scammed and offers investors advice about how to research investment offers and who to contact for help’, Mr Tanzer added. The website has been launched on Aprils Fools’ Day to highlight how easy it is to be deceived by scam offers and is part of ASIC’s ongoing program to help Australian consumers protect their money.
‘The Internet is home to all manner of false information. Online scams like this can pop up from anywhere in the world – particularly from those countries where law enforcement is weak. That’s why it’s essential potential investors learn to recognise the telltale signs of a scam’, Mr Tanzer said. In developing the ElectroHarvest website, ASIC employed some of the common techniques used by scamsters:
• the company is not registered with ASIC and does not exist • credibility is added via testimonials and biographies of people who don’t exist
• a sense of urgency is created using statements like ‘sold out’ and ‘hurry, invest today’ so interested people won’t have time to do their homework • extremely high returns with low risks are ‘guaranteed’ • no prospectus is offered. ‘As with any investment, slow down, and make some basic safety checks. Ask: • Does the company really exist? • Is it based in Australia? If so, is there a prospectus lodged with ASIC? Have you read it? • If the company’s located overseas, what are your legal rights if anything goes wrong? Can they be realistically enforced? • If a website is offering investment advice or an investment product, do they have an Australian financial services licence and a product disclosure statement? ‘Potential investors can also visit ASIC’s consumer website, FIDO, at www.fido.gov.au for financial tips and safety checks’, said Mr Tanzer. ASIC also offers a range of resources for consumers including: • a free register of all Australian companies • a list of all prospectuses lodged with ASIC • a risk return calculator to help compare the return offered by a proposed investment with the relevant market sector, and to determine how risky an investment could be • news on the latest financial scams and swindles identified by ASIC • tips on getting licensed financial advice. Consumers who think they’ve spotted a scam can contact ASIC’s Infoline on 1300 300 630 or email [email protected] Further information including warnings about the latest financial scams is available from ASIC’s consumer website, FIDO, at www.fido.gov.au.
For further information contact: Mr Greg Tanzer Executive Director, Consumer Protection Telephone: 07 3867 4704 Mobile: 0411 549 144 Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310