Two consumers will receive compensation for the money they paid in membership fees for the illegal Greenstar pyramid selling scheme following Australian Competition and Consumer Commission action.
Last week, Justice Nicholson in the Federal Court handed down his judgment on compensation concerning his finding last year that Greenstar Co-operative Ltd, Bio Enviro Plan Pty Ltd, Buyplus Commodities Brokers Pty Ltd, Greenstar Management Pty Ltd and their Directors Kevin Robert Smith, Paul Anthony Haigh and Trevor Sampson had promoted an illegal pyramid and referral selling scheme known as Greenstar, and had also engaged in false and misleading conduct in relation to the scheme.
Whilst Justice Nicholson ordered compensation to two consumers for money paid for membership fees and who had given evidence in the trial, he declined to make a general compensation order for other Greenstar members that the ACCC had sought.
He ordered that the respondents pay the ACCC's costs.
In his reasons for judgment denying the compensation order, Justice Nicholson said that given the bankruptcy of the only two remaining directors of Greenstar, the insolvency of the companies themselves and the absence of any other respondents with assets able to meet likely liabilities such orders appeared futile. He therefore declined to make them.
"The ACCC is pleased by the court findings, which support the ACCC's vigorous stance to prevent or stop pyramid selling that breach the Trade Practices Act", ACCC Chairman, Mr Graeme Samuel, said today. "The judgment again highlights that given the very nature of pyramid schemes, even with the best efforts of the ACCC, consumers hoping for compensation for joining them are likely to be disappointed.
"However, members who believe they have suffered losses as a result of being induced into a pyramid scheme can take their own private action against the promoter to recoup any losses if the schemes are found to be illegal.
"Consumers must be wary about entering into any schemes promising quick returns, particularly those with elements of pyramid schemes and/or referral selling. In some cases, participation and promotion of these schemes may even be illegal".