ASIC issues online shark alert
After receiving a number of complaints from the public, ASIC's Executive Director of Consumer Protection Greg Tanzer issued an alert warning Australians to not fall for investment opportunities from some Internet-based firms including Never Ending Stori and Global Mutual.
"Complaints from the public about the Never Ending Stori and Global Mutual sites have prompted us to warn other Australian consumers about online, international investing," said Tanzer in a statement. "This type of investing is typically dangerous and there may be no protections if something goes wrong".
According to the ASIC, the Never Ending Stori site tempts investors by offering daily returns of one percent. However, the company is not licenced to operate in Australia.
"Unlike the movie, this story will not have a happy ending for investors. Based on the information we have, ASIC is concerned that this scheme may be a pyramid scheme operation," said Tanzer who pointed out that such schemes are illegal in Australia.
"Pyramid selling is illegal in Australia but most importantly, because the entity is not licensed to offer investments or any kind of financial product, if you send your money to them and something goes wrong, you risk losing the lot," he said.
Central America-based Global Mutual does not have a licence to operate in Australia either and Tanzir warns that investors will have no protection if something goes wrong.
"ASIC has already received complaints from savvy investors who are concerned about the claims made on the Global Mutual Web site... the offshore location of these particular schemes makes it almost impossible for us to do anything," he said.
As the ASIC is powerless to shut down these sites, it decided to name the companies in the hope of dissuading Australians from dealing with the companies.
"We don't have the power or jurisdiction to take action in international locations, it's important we issue warnings and hopefully prevent people from getting caught before it's too late," added Tanzer.