SkyBiz pyramid scheme victims repaid today

New Zealand victims of a global pyramid scheme are today being sent their compensation from a U.S. $20 million fund set up to compensate victims worldwide.

SkyBiz offered the opportunity to earn thousands of dollars a week by recruiting new 'associates.' The U.S. Federal Trade Commission prosecuted SkyBiz as a pyramid scheme, and earlier this year reached a $20 million U.S. settlement with the scheme's promoters.

Consumers whose compensation claims have been approved are today being sent 'stored value' MasterCards (cards with credit balances) to compensate them for the money they lost. The deadline for consumers to submit claims in this case has passed, and no new claims are being accepted.

Commerce Commission Director of Fair Trading Deborah Battell said the SkyBiz settlement was a good example of enforcement agencies working together to deal with a global problem.

"Along with consumers around the world, New Zealanders lost money on this 'get rich quick' scheme," says Ms Battell.

"By working together, members of the International Consumer Protection and Enforcement Network (ICPEN), including the New Zealand Commerce Commission, have been able to secure $20 million U.S. in refunds for consumers worldwide."

"The Commerce Commission will continue to maintain strong relationships with its international peers, to help address overseas-based activities that affect New Zealand markets and consumers," says Ms Battell.

For more information about the SkyBiz redress fund visit www.skybiz-redress.com.open_in_new

Background

SkyBiz Pyramid Scheme.

In May 2001, the Federal Trade Commission filed suit in U.S. district court in Tulsa, Oklahoma, against SkyBiz and its principals, alleging that they promoted a pyramid scheme with claims of quick riches. The complaint alleged the defendants used sales presentations, seminars, teleconferences, and its Web site to tout the opportunity to earn thousands of dollars a week by recruiting new "associates" into the program. The cost to join the SkyBiz program was $125 U.S., supposedly to pay for an "e-Commerce Web Pak." Focusing on the "huge amounts of money" participants could earn, the defendants encouraged participants to buy more than one Web Pak at a time. According to the Commission, the plan was a classic pyramid scheme, promoted by fraudulent earnings claims.

The case was scheduled to go to trial on January 16, 2003. By that date, the FTC also had pursued the case in the courts of Ireland and Bermuda, and received assistance from law enforcers in numerous countries including Australia, South Africa, New Zealand, and Canada. Before the trial, however, the defendants agreed to a settlement that was entered by the court on January 29, 2003. The settlement provided $20 million U.S for consumer redress and barred the defendants from participating in pyramid schemes or making specific earnings claims when promoting future business ventures.