The Australian Competition and Consumer Commission has been granted consent orders relating to a pyramid selling scheme which was allegedly promoted by Mr Bryan Hedges under the auspices of The Christian Support Pen Friend Club
The Federal Court, Melbourne last week ordered that Mr Hedges:
- be permanently restrained from promoting the scheme or any similar scheme;
- be permanently restrained from making certain alleged misrepresentations in connection with the scheme or any similar scheme; and
- pay the Commission's costs of $8,000 by instalments of $100 per month.
The ACCC was alerted to the scheme by the South Australian Office of Business and Consumer Affairs. The scheme was promoted using unsolicited mail about The Christian Support Pen Friend Club.
Under the scheme commissions and other benefits were offered to members of the Club based upon the number of subscriptions to a monthly newsletter which they sold. Membership of the Club was subject to payment of a fee which entitled members to receive subscriptions to the newsletter.
The ACCC alleged that the scheme involved a contravention of the pyramid and referral selling provisions of the Trade Practices Act. In addition, it was alleged that certain representations regarding the profitability of taking part in the scheme which were made in promotional material distributed by Mr Hedges were misleading in breach of the Act. Referral and pyramid selling schemes involve inducing consumers to acquire goods or services by offering them certain contingent benefits following their purchase. Such schemes have been declared illegal because the benefits offered by promoters to potential participants in order to induce them to pay a joining fee may not be realised.
"In 1992-93 action was taken against Mr Hedges in respect of another pyramid selling scheme which he promoted under the name Multi-Link International," ACCC Chairman, Professor Allan Fels, said today. "Mr Hedges had entered into a deed of settlement with the-then Trade Practices Commission in 1993 agreeing to refund subscriptions.
"In light of this previous conduct, the ACCC could not stand by while Mr Hedges again engaged in similar conduct," Professor Fels said.
Further information Professor Allan Fels, Chairman, pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808