Issue Date:  -  Wednesday, 4 August 1999

The Syndicate Club

Commissioner for Fair Trading Patrick Walker said today the Ministry of Fair Trading was receiving a large number of inquiries about a lotto syndicate scheme operated by The Syndicate Club Pty Ltd, a Queensland based company.

I understand the scheme allows members to participate in Ozlotto and Powerball through the establishment of syndicates, Mr Walker said.

Lotto syndicates are not new, however I am concerned about The Syndicate Club scheme as it appears to offer potential members the prospect of earning bonuses by introducing new members into the scheme Mr Walker said.

Inducing persons into a scheme by holding out the prospect of a benefit principally by recruiting new members is a characteristic of pyramid schemes, which are illegal in WA.

Pyramid schemes are illegal under the Fair Trading Act. Anyone who promotes or participates in such a scheme could be fined up to $20,000, Mr Walker said.

Mr Walker said pyramid schemes did not work because they were based on the premise that an unlimited number of people were available to be recruited.

Fair Trading has received calls from consumers alleging that they had been told The Syndicate Club scheme had been approved by Fair Trading, but the Ministry has given no such approval, he said.

Mr Walker said the The Syndicate Club scheme was currently being examined by the Queensland Office of Fair Trading.

I will be guided by any advice we receive from Queensland Fair Trading, however I intend seeking further legal advice about the legality of the scheme in Western Australia.

Mr Walker said the Ministry was also liaising with the Australian Competition and Consumer Commission on the matter.

--------------------------------------------------------------------------------

Post script: 15 December 1999
Legal advice obtained since the issue of this media release indicates that the scheme is unlikely to contravene the pyramid selling provisions of the Fair Trading Act 1987 ("the Act"). However, that advice also indicates that the Syndicate Club's "bonus plan" most likely contravenes the "referral selling" provision of the Act. The promoter has advised the Ministry of Fair Trading of proposed changes to the scheme to avoid breaching the law.

The Ministry has not endorsed the proposed changes however the scheme is not the subject of further investigation at this time. This action should not be interpreted in any way as constituting approval or endorsement of the scheme by the Ministry of Fair Trading. To state or imply Ministry approval or endorsement is an offence in itself under the Act and action will be taken against any person who commits such an offence.