ACCC obtains interim court orders against Greenstar Cooperative Ltd

Interim injunctions have been granted against Greenstar Co-operative Ltd and four of its directors and an associated company, Greenstar Management Pty Ltd.

The Federal Court injunctions will remain in place until the matter is determined at trial or any earlier order. The orders prevent the companies and the directors from:

• inducing persons to becoming members of the Greenstar Scheme
  
• representing that persons would be paid a commission in return for assisting the companies to provide goods or services from Greenstar to other consumers
  
• making representations that the companies have for supply, whether alone or as part of the Greenstar Scheme, a Greenstar Card and that in respect of the use of the Greenstar Card:

• the card is of any assistance in making telephone calls
  
• any record of any currency is kept in relation to the card
  
• any arrangement has been made with any bank or financial institution in relation to the card
  
• a deposit can be made to the credit of any card
  
• the card is of any assistance in making purchases by way of utilising an electronic communication network
  
• the card possesses any debit card facilities
  
• the card is of any assistance in obtaining cash from an automatic teller machine
  
• the card has any association with any debit platform or with any other network utilising electronic communication in relation to banking or commerce
  
• it is possible for a member of the Greenstar Scheme to earn money from their membership.

The court further ordered that the companies and the directors be restrained from representing the merits of, or characterisation of the Australian Competition and Consumer Commission action, including that the ACCC regards the breaches as 'technical', that the ACCC has 'softened' its attitude in the prosecution of its action against the companies and the directors; that there has been some form of 'resolution' of the ACCC action and that the ACCC in any way condones, approves or endorses any of the trading activities of the companies.

Background

The ACCC action alleges Greenstar Co-operative Ltd and Greenstar Management Pty Ltd and other related companies (Bio Enviro Plan Pty Ltd, Buyplus Commodities Brokers Pty Ltd) and their associated directors were involved in illegal pyramid and referral selling schemes. The ACCC also alleges that the companies misled consumers and made false representations in relation to the attributes of a transaction card and an earthworm farming program which were part of the pyramid selling scheme.

The ACCC action alleges the conduct of the companies and directors breaches a number of the consumer protection provisions of the Trade Practices Act 1974.

The Greenstar scheme has been extensively promoted on the Internet and at public meetings in capital cities across Australia. The ACCC alleges consumers were induced by Greenstar to join the scheme by promising members a worldwide business that could generate lifelong, residual income, 24 hours a day, seven days a week, from seven different streams of income, without the member leaving his or her home.

Further, the ACCC alleges Greenstar and the Directors have claimed to prospective members that:

• Greenstar members who paid US$30 per month for 36 months and who wished to leave the scheme would receive their money back in full
  
• Greenstar would provide members with electronic 'transaction cards' which could be used for making purchases anywhere in the world where major credit or debit cards were accepted (including over the Internet), withdrawing money from ATM machines worldwide, transferring money and making phone calls at cheap international rates, and that the transaction charge from users would be returned to the members 'world pool' providing the potential for huge returns to members
  
• Greenstar is the major shareholder in Australian Environmental Technologies (AET) and that dividends from these shares would flow into the Profit-Share pool with AET anticipating an April/May 2001 float.

The ACCC alleges these representations were false, misleading or deceptive.

The ACCC is seeking court orders against Greenstar, the other companies, and the directors. The orders sought include declarations of breaches of the law; injunctions stopping similar conduct in the future; refunds for affected consumers; and a compliance program and costs. The matter has been set down for further directions on a date and time to be advised after 5 August 2001.