The Australian Competition and Consumer Commission has today instituted legal proceedings in the Federal Court in Perth, Western Australia, against SkyBiz.Com Inc (Skybiz) the US company in charge of the Skybiz Home Business Scheme, for breaches of the pyramid selling and other consumer protection provisions of the Trade Practices Act 1974.
The Court documents were served through the US Court appointed receiver for SkyBiz.
The ACCC alleged that SkyBiz breached the Act by operating and promoting the Skybiz Home Business Scheme as a pyramid selling scheme. It is alleged participants in the scheme paid SkyBiz.Com Inc US$100 for a website in order to take part in the scheme. It is alleged SkyBiz claimed participants could then earn a substantial income for introducing new consumers into the scheme.
Section 61 of the Act prohibits the promotion of, or participation in, pyramid selling schemes in which a person makes a payment to a corporation with the prospect of receiving payments for the introduction of other participants to the scheme while section 57 prohibits referral selling.
The ACCC alleges that SkyBiz also breached other provisions of the Act including section 52, which prohibits misleading or deceptive conduct, and section 59, which prohibits false or misleading representations about the profitability or risk or any other aspect of any business activity that may be run from a person’s place of residence.
This action by the ACCC follows an earlier court action in which the Federal Court in Perth handed down consent orders on 22 August 2001, which declared Mr Kevin Ryan, a Western Australian promoter of the Skybiz 2000 scheme, had breached section 61 of the Act.
"The object of the ACCC's action is to protect Australian consumers from the actions of an overseas based company which promotes the scheme, amongst other ways, via the Internet", ACCC Chairman, Professor Allan Fels, said.
"This action also demonstrates the relationship and level of cooperation the ACCC has built up with its international counterparts. In particular, the ACCC has been liaising closely with the Federal Trade Commission in the United States of America on this matter, as well as keeping other international agencies informed of the ACCC's inquiries".
A directions hearing has been set for 2 October 2001 in the Federal Court, Perth.