ASIC Fools to Protect in April
ASIC Fools to Protect in April
April 2, 2007: In April Fools’ tradition, ASIC has launched a fake investment website to alert internet users about the scams, tricks and dangers lurking within investment ‘opportunities’ online.
The site www.electroharvest.com has been designed by the Australian Securities Investment Commission to reflect the tactics of stock market con artists. All the usual drawcards are available including the ‘exceptional risk-free returns’ as well as grand investment opportunities that will not only generate cash, but supply socially responsible products.
According to Greg Tanzer, ASIC Executive Director of Consumer Protection, it is often extremely difficult for consumers to differentiate between genuine and scam opportunities. “While many scam websites promoted seemingly outrages products or services, they were otherwise made to look credible and authoritative.
“Hopefully, by using ‘real work’ examples rather than simply issuing warnings, we can more effectively demonstrate how easy it is to fall prey to an online investment scam,” says Tanzer.
The site disuses investment opportunities regarding a product called ‘Electro Harvest.’ It’s a remarkable device that recycles ambient electromagnetic radiation back into usable household energy. “Just imagine the investment possibilities,” reads the opportunity’s description. “Here is your chance to be part of a private equity investment. Grow your wealth without the heavy and costly compliance burdens of being part of a listed public company.”
If users attempt to purchase either a bronze or silver investment ‘opportunity’ they are hit with a page that bluntly states ‘you have been scammed.’ The page says the offer is a ‘complete fabrication’ posted by ASIC to alert users to potential online frauds. ASIC then goes on to list pointers on how to identify attacks, links to a ‘risk return calculator’ to prove how unrealistic the offer actually is as well as contact details for further help.
By deploying some of the most common tactics for online investment attacks ASIC launched a Website based on a company that:
• Is not registered with ASIC and does not exist
• Sites testimonials and biographies of people who don’t exist
• Creates a sense of urgency on the investment ‘opportunity’ available
• Offers extremely high return and ‘guarantees’ low risk
• Offers no prospectus
• Only provides international addresses for its accountants and lawyers
• Copies financial language of real investments to appear credible.
Tanzer urges potential online investors to thoroughly investigate offers; ensure the company exists, that’s its prospectus is lodged with ASIC if Australian based and investigate all legal rights of the country it is located in to ensure you are covered if something goes wrong.
“As with any investment, slow down, and makes some basic safety checks,” says Tanzer.