Media Statement

Government Targets Pyramid Schemes

Consumer Affairs Minister Jim Anderton promised today that pyramid scheme promoters who breach the Fair Trading Act will face higher fines and a Commerce Commission with stronger powers.

The Government today announced new legislation targeted at pyramid scheme promoters.

"The Labour/Alliance Coalition Government will increase penalties for offences related to pyramid selling schemes to $200,000," said Jim Anderton.

"There will be a new 'commercial gain' penalty for pyramid scheme operators that will give the Courts the ability to impose even higher penalties to effectively cancel out pyramid scheme profits.

"The Labour/Alliance Coalition Government is taking tough action to deter people from misleading consumers about the money they can make from pyramid schemes. In the past the maximum penalties were so low that some promoters saw them as simply a cost of doing business.

"In another strong message we are sending to pyramid scheme sellers we will broaden the Commerce Commission's search powers in line with the powers already in other legislation such as the Commerce Act.

"The Commission will be able to issue a notice requiring witnesses to release certain documents or information to assist with the Commission's investigation," said Jim Anderton.

Penalties under the Act for a range of other offences will be doubled to a maximum of $60,000 for individuals and $200,000 for companies to allow the courts to impose more meaningful penalties and give greater deterrence against offending.

These pyramid scheme disincentives are part of a range of measures implemented by the Labour/Alliance Coalition Government to protect consumers.

Other changes include: a total overhaul of motor vehicle dealer law; changes to credit law; a Consumer Protection Bill (to be introduced to Parliament this month); stronger protections for consumers shopping on the internet; and changing the time in which claims under the Fair Trading Act can be lodged from three years after purchase to three years after faults are found.

ENDS

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