Settlement reached to redress SkyBiz.com victims

By ADAM GIFFORD

New Zealand victims of the SkyBiz.com internet pyramid scam have just two months to apply for their share of the US$20 million settlement between SkyBiz and the United States Federal Trade Commission.

To qualify, people need to apply to the SkyBiz Redress Fund administrator at www.skybiz-redress.com before July 31.

Commerce Commission fair trading director Deborah Battell said more than 5000 New Zealanders could have been taken in by the scam, in which people were encouraged through seminars or over the internet to buy website programmes or "Web Paks".

Each Web Pak cost about US$125 and entitled the owner to set up two websites, one to sell more Web Paks and the other to create an e-commerce site for their own business.

"What we found in New Zealand was more than 85 per cent of people only used the SkyBiz site, so the primary purpose was to make money by recruiting others," Ms Battell said.

That qualified it as a classic pyramid scheme. More than 13,000 Web Paks were sold in New Zealand, as people were encouraged to buy two or three Web Paks to increase their earning potential.

She said many buyers discovered they could not get any remuneration until they had recruited at least nine other people into the scheme.

Last year the commission prosecuted one of the scheme's New Zealand promoters, Gregory Ian Dawson, under the Fair Trading Act. He was convicted and fined $4500.

"It wasn't a huge fine, but he didn't really have the means to pay compensation," Ms Battell said.

She said duped consumers would have to move fast. "A lot of people go to ground when schemes like this are uncovered, because they are breaking the law by participating, or they feel like mugs for being taken in."

The Federal Trade Commission took action against SkyBiz in June 2001 and pursued the company in the courts of Ireland and Bermuda.

It also helped law enforcement agencies in New Zealand, Canada, Australia, South Africa and the United Kingdom take separate actions.