Issue Date:  -  Monday, 8 November 1999

The Cash Club hits

The Commissioner for Fair Trading, Patrick Walker, today said that the Ministry of Fair Trading was receiving a large number of inquiries about "The Cash Club".

The Cash Club scheme is described as a "money game" that consists of an imaginary President, two Vice Presidents, and four Committee Members. In every "game" the team has to recruit eight new people who each pay the President between $500 and $5000 depending on the "level" of the game.

Once the President has all of the money, he departs and the scheme splits into two new "games". The two Vice Presidents assume the top positions of President and the process is repeated again.

Although innocently described as a game, the scheme relies on the continuous recruitment of new members in order to survive.

"Inducing persons into a scheme by holding out the prospect of a benefit principally by recruiting new members is a characteristic of pyramid schemes" Mr Walker said.

"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 pyramid schemes do not work because they are based on the idea that there are an unlimited number of people available to be recruited.

"The problem with all pyramid schemes is that they always collapse and people lose money. The only winners are the unscrupulous few who start up these schemes and take money from those they enlist.

Some callers to the Ministry of Fair Trading claimed that they had been told that The Cash Club had been approved by Fair Trading.

"The Ministry of Fair Trading has given no such approval and it is an offence to make such a claim" Mr Walker said.

"Any claims of approval should be reported to the Ministry immediately. and swift action will be taken".

Mr Walker said that Acting Commissioner for Consumer Affairs in Queensland, Ms Ulla Zeller, had also issued a warning recently about The Cash Club.

Media Contacts:
Mike Winchester
Tel: (08) 9282 0961
Neil Stanbury
Tel: (08) 9282 0613