Jan 26 2005
Investors keen to make a quick profit are falling victim to an array of sophisticated scams, Consumer Minister Gerry Sutcliffe has warned today.
Mr Sutcliffe is warning consumers and businesses about the type of scams that have been prevalent in the last year, and warning the scammers that if they continue to operate, the DTI's Companies Investigations Branch will come knocking.
Current scams that are catching out consumers include companies that are:
- running "get rich quick" property schemes;
- advertising "buy to let" properties in poor condition and make claims about unrealistic rental returns;
- advertising individual plots of agricultural land in areas where there is virtually no development potential;
- selling advertising space in a range of publications, claiming that part of the money raised will go to good causes;
- offering the chance to make a profit from buying up debts;
- charging for unsolicited office consumables; and
- targeting the compensation packages of retired or redundant staff.
Mr Sutcliffe said:
"Last financial year we successfully wound up 371 companies, typically for fraudulent trading. But it is a sad fact that the scams and rip-off money-making schemes continue to resurface in a number of different guises, usually taking advantage of people's good nature or desire to make a bit of money.
"Anyone out to rip off people through dodgy business practices may think they'll get away with it, but they won't. DTI investigators can move in very quickly to have a company wound up, and directors may find themselves in court having to answer for their actions."
DTI investigators often resolve problems without going to court, and tackle poor business practices without the need for legal action.
But anyone who is deliberately defrauding the public faces having their business shut down, the assets seized and their activities publicised in the local and national press. They may later find themselves in court facing criminal charges and a custodial sentence. The DTI also has the power to apply to the Court to disqualify directors for up to 15 years.
Members of the public and companies should always be on their guard when entering into unconventional business transactions.
Tips on avoiding scams include:
- only do business with companies you know and trust;
- make sure you fully understand all the terms and conditions of any offer made to you;
- take your time before you make any decision;
- don't provide any financial or other personal information before you establish whether the company is legitimate;
- understand and monitor your investments and ask frequent questions and map out your financial goals before you meet with a financial planner;
- don't judge the credibility of a company or sales person by how 'professional' they or their promotional material or web site seems;
- don't fall for high-pressure sales tactics;
- don't let embarrassment or fear keep you from reporting fraud or abuse to the appropriate authorities; and
- don't ever be afraid to ask questions. In fact, the more questions you ask, the better.
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