It seems as though there’s an awards ceremony every week. Oscars, ARIAs, Golden Globes … The list goes on. Movie and music stars always seem to be trotting along to some presentation or another. Such a hard life.
There is one annual award though that you won’t see televised. You won’t read about it in the entertainment pages of any newspaper or magazine. And for good reason – it’s not exactly riveting information to anyone other than a finance nerd. However being a finance nerd myself, I’m going to tell you all about ASIC’s annual “Pie in the Sky” awards, because it follows on from the internet scamming theme I started a couple of weeks ago.
Each year, ASIC (Australian Securities & Investments Commission) awards a trophy for the most outrageous financial scheme that’s too good to be true. The first, second and third place getters were as follows:
This year the winner was an e-mailed advance fee fraud scam. This far-fetched scam claimed a lawyer from Togo was handling the estate of a man who died in the Boxing Day Tsunami disaster in Phuket three years ago.
According to the offer, the person receiving the email coincidentally had the same name as the deceased man and the lawyer had the role of establishing the relationship. People could get a share of the wealth by claiming to be the deceased’s next of kin. To claim the wealth, you needed to respond to the email. The nature of this type of fraud is that you pay a fee before you receive the money. This is an advanced fee fraud where you pay to receive nothing.
The second-place getter is Instep Super. ASIC commenced an investigation in early December 2007 following a number of complaints from members of the public and a referral from the Australian Prudential Regulation Authority (APRA), that Instep Super was advertising on television, radio and online offering returns on investment of superannuation funds between 8 and 20 per cent. The advertisements also claimed Instep Super was ‘the best performing superannuation fund in Australia’.
ASIC found that Instep Super did not have an Australian financial services licence and concluded that Instep Super did not have any reasonable basis upon which to make the claim of being the ‘best performing superannuation fund in Australia’. As a result, the Instep claims were found to be misleading and deceptive.
In this case, ASIC identified a deliberate breach of the law which had real potential to cause significant harm to anyone who saw and acted upon these advertisements.
Honourable mention should go to an April Fool’s day joke that ASIC played upon the public (yes, apparently even government regulators have a sense of humour – albeit a fairly warped one).
On April 1 2007 a business called Energy Recycling Solutions began offering investments in The Electroharvest. This device supposedly recycled ‘ambient electromagnetic radiation back into usable household energy’ promising to cut ordinary Australians’ power bills by 37 per cent. Investors were invited to invest up to $40,000 with ‘guaranteed’ returns of at least 30 per cent per annum.
It was however a fake scam launched by ASIC to educate investors about how to identify and avoid financial scams. Anyone who tried to go ahead and invest was led to a page with advice about how to research investment offers and who to contact for help.
It might sound pretty obvious to spot, but the fake electroharvest website that ASIC set up has attracted more than 75,000 hits since it was launched in April 2007. All visitors to the website were reminded of the golden rule, ‘if it sounds too good to be true, it’s probably a lie’.
Now if you are reading these and thinking “well, duh, I’ve come across much better scams than that”, then jump onto the ASIC website (www.fido.asic.gov.au) and nominate a scam for the 2009 awards. If your entry wins an award then you’ll win yourself an easy $100. And according to ASIC, that’s NOT a scam!!
Have a great week!
The author, Justine Davies, is a member of the Financial Planning Association. She is the author of HOW TO AFFORD A BABY, published in June 2007 by ABC Books: http://shop.abc.net.au/browse/product.asp?productid=164101
This information is correct at time of writing. It is general advice only and has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.