Property spruikers have been put on notice by regulators, as the NSW Department of Fair Trading warns promoters of property investment schemes to operate legally or face sanctions.
Between 2013 and 2015, 20 traders received legal notices requiring them to substantiate claims made in advertisements and at their seminars, according to the NSW Department of Fair Trading. This prompted legal action against at least 10 entities and their associates.
In addition, legally-enforceable undertakings were given to regulators by seven traders who promised they would change their advertising and stop making misrepresentations. A total of 67 warning letters were also issued.
NSW Fair Trading Commissioner Rod Stowe says regulators are sending a message to property spruikers, and they intend to crack down harder on those who are breaking the rules.
“We are sending the message to the industry that they have to act fairly with consumers or face action by consumer law regulators using the Australian Consumer Law.
“Failure to do so will render the promoter liable for civil and criminal penalties, in some instances up to $1.1 million for a corporation and $220,000 for an individual.”
According to Stowe, a common theme is consumers being misled about the financial benefits of buying into a particular scheme.
“Regulators across Australia have initiated court action to stop promoters who promise financial benefits they cannot deliver on or who fail to tell people about their cooling-off rights to get out of a service they were pressured into buying at a ‘free’ seminar.”