Issue Date:  -  Friday, 30 March 2001

Alpha Club warning - Fair Trading

The Ministry of Fair Trading today urged consumers to have nothing to do with schemes such as the Alpha Club, a scheme that has already been prosecuted in New South Wales as an illegal pyramid scheme and is under investigation by Queensland authorities.

Commissioner for Fair Trading Patrick Walker said the Ministry was aware that secretive recruitment meetings were held last week at five-star Perth hotels, where people were pressured to pay $6050 to join the club.

Members are told that for each new member they recruit, they earn a commission of $1240.

"Pyramid schemes prey on some people’s eagerness to get rich quick," Mr Walker said.

"Illegal under the Fair Trading Act, they rely on the recruitment of new members to flourish, but inevitably fail, with most participants losing their money," he said.

Mr Walker said the Ministry’s inquiries had revealed recruitment meetings were by invitation only, involved pressure sales tactics and were run by presenters who encourage frenzied chanting by members.

In March last year the Wollongong-based Alpha Club was fined $9000 and ordered to pay more than $15,000 in costs for breaching New South Wales’ pyramid laws. In December, Queensland’s Office of Fair Trading raided a Brisbane organiser’s home and is continuing its investigations into the club.

"In one Perth case we learned about last week, a man was unable to raise the $6000 to join, so he convinced his brother to take out a personal loan for the sum," Mr Walker said.

Fair Trading officers are continuing their investigations.

Consumers can ring the Fair Trading Call Centre during office hours on 1300 30 40 54 for the cost of a local call. Last year the Call Centre gave free advice to more than 170,000 West Australians.