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$5,000 Fine For Envelope Stuffing Scam

Issued 12 June 2002

Auckland Trader Fined $5,000 For Envelope Stuffing Scam

Auckland trader Gregson Cretchein Mathews was fined $5,000 in the Auckland District Court yesterday for breaching the Fair Trading Act in relation to a “work from home” scam. In addition, Mathews was fined $500 solicitor’s fees and $130 court costs.

A Commerce Commission investigation revealed that Mathews made representations in a letterbox flyer - distributed in various Auckland suburbs between November 1999 and June 2001 - that people could earn money from home by stuffing and addressing envelopes.

People were asked to send $24.95 to Mathews for the complete Homemailers Program. In the program document, it was revealed to participants that the scheme was not an opportunity to stuff or address envelopes at home, but a “plan” that involved placing advertising for positions stuffing envelopes from home and charging any enquirers $24.95 for their registration into the scheme. The investigation revealed more than 800 people registered for the scheme.

Judge Hobbs said that given the high level of dissemination of the flyers and the previous warning given to Mathews by the Commission, it was difficult to find conduct more flagrantly dishonest than his.

Director of Fair Trading Deborah Battell said the advertising content was a serious concern not only because it blatantly misled the public but because it targeted very vulnerable people.

“Mathews was deliberately and callously profiting from people who had limited employment options and who could ill afford the registration cost.

“The program material was also of concern because it warned readers not to be fooled by the “many fraudulent envelope addressing and chain letter schemes being sold today’, when he himself was perpetuating that very activity,” Ms Battell added.

“The Commission will continue to take action in this area, and would like people to report any further instances of such schemes to the Commission on 0800 943 600.”

The 0800 number for the Commission’s contact centre is available between 8.30am - 5pm, Monday to Friday.

Background

Section 22(1) of the Fair Trading Act 1986 states:

22 Misleading representations about certain business activities „o

(1) No person shall make a representation that is false or misleading in a material particular concerning the profitability or risk or any other material aspect of any business activity that that person represents as one that can be, or can be to a substantial extent, carried on at or from a person’s place of residence.

Commission media releases can be viewed on its web site www.comcom.govt.nz


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