RealTime IT News

ASIC Shines Light on Internet Investment Scams

The Australian Securities and Investments Commission (ASIC) revealed that it convinced 233 people to part with more than A$4 million over the Internet during an April Fools Day joke.

The fake Internet investment site, set up by ASIC on April 1, told would-be investors it was a sure thing they would triple their money in 15 months if they invested in Millennium Bug Insurance (MBI).

The site claimed MBI was offering blue chip companies insurance against losses from the Year 2000 Millennium Bug and because the Millennium Bug was considered to be high risk, the insurance company would be able to charge high premiums, giving investors a good rate of return.

Over 10,200 people visited the fake site during the past month, 233 people committed themselves to $10,000 and $50,000 investment packages and 1,212 people asked for more information about the investment.

ASIC chairman Alan Cameron, said this shows how willing people are to part with large sums of money without finding out anything about the company they are giving their money to.

"We chose the Internet as this year's April Fools Day investment scam because some people, who might normally question the validity of an investment offer, seem to think that offers on the Internet come with some authority."

"They don't! Taking advice over the Internet is the same as taking advice from someone on a street corner. Handing over $50,000 on the Internet is the same as handing over $50,000 to someone on the street," Cameron said.

The ASIC points out that the first and best protection against fraud is remaining sceptical about offers which look too good to be true.

Cameron said steps people could have taken to protect themselves would have been to visit the ASIC Web site where a search would have revealed there was no company called MBI and no prospectus lodged for this investment scheme.

All those who fell for the scam will receive a return email from ASIC explaining the April Fool's Day joke as well as advice on how to protect themselves in future.

The exposure of the ASIC Internet scam comes hot on the heels of the Commission's recent formation of a new electronic enforcement unit, set up to uncover and take action against Internet investment fraud.