The United States Federal Trade Commission (FTC), which entered into a settlement with the SkyBiz operators in 2003 to refund consumers, has announced that SkyBiz victims have to 30 March 2007 to file a refund claim with the redress fund administrators.

Consumers affected by the SkyBiz.com pyramid scheme will be sent an email from the court-appointed redress administrators about the filing closing date. Further information on claiming a refund is available from the redress fund website at www.skybiz-redress.com

New Zealand claimants will join SkyBiz victims in more than 200 countries in receiving refunds this year from the fund. The refunds will be provided in stored-value credit cards.

The SkyBiz scheme involved the sale of website programmes or 'WebPaks'. Individuals were recruited over the internet to promote the purchase of the WebPaks, with the lure of great profits.

Commerce Commission Director of Fair Trading Deborah Battell said that the scheme initially required new recruits to sell Webpaks to at least two others to receive compensation. Over time, that sales requirement rose to nine WebPaks before payment could be made. More than 13,000 WebPaks were sold in New Zealand.

Ms Battell said that the Commerce Commission liaised closely with the FTC on the SkyBiz investigation, along with enforcement agencies in countries including Canada, Australia, South Africa and the United Kingdom.

"The Commerce Commission is very pleased that the outcome of the international co-operation during the SkyBiz investigation was a positive one for both New Zealand consumers and thousands of other consumers worldwide".

Background

In May 2001, the FTC filed suit against SkyBiz and its principals, alleging 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, 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 stipulated to a settlement that was entered by the court on January 29, 2003.

The settlement provided $20 million for consumer redress and barred the defendants from participating in pyramid schemes or making specific earnings claims when promoting future business ventures.

A FTC press release issued on March 24, 2003, details the terms of the settlements with several of the individual defendants in the case, as well as the participation the FTC received from other law enforcement agencies in bringing and settling the complaint. The initial details of the redress plan were announced in a May 14, 2004 press release. Both releases can be found on the FTC's website www.ftc.gov

The FTC acknowledged the numerous members of The International Consumer Protection and Enforcement Network (ICPEN), including the New Zealand Commerce Commission, who provided substantial assistance in the administration of redress in this case.

The settlement provided US$20 million for consumer redress and bars all the defendants from participating in pyramid schemes or misrepresenting the amount of sales, income, profits or rewards.

The Commission took action in March 2003 against Gregory Ian Dawson for promoting the SkyBiz scheme in New Zealand. Dawson was convicted of breaching the Fair Trading Act but was not in a position to pay compensation to affected consumers.

For more information on the New Zealand Commerce Commission's case against Gregory Ian Dawson, visit the 2003 media release Promoter fined $4,500 for involvement in SkyBiz multi-level selling scheme, 31 March 2003.