Compensation for pyramid scheme victims
Get Rich (not quick)!
Over 25,000 UK victims of an illegal international pyramid scheme could receive compensation from a $20m US redress scheme, set up to compensate victims of a fraudulent firm called Skybiz.
Oklahoma-based Skybiz operated between 1998 and 2001, ostensibly selling a work-at-home business scheme in which consumers were asked to buy an ecommerce web pack for $125.
Consumers were misled into believing that they could get rich quick if they recruited new associates into the programme. As a result, members were recruited to the scheme in the US, the UK, Ireland, Australia, South Africa, New Zealand and Canada.
In June 2001, the US Federal Trade Commission banned the company from operating what it described as a classic pyramid scheme – a scheme in which investors are misled about the likely returns, as there are not enough people to support the scheme indefinitely and only the people who set up the scheme are able to make money.
The FTC and the promoters of the Skybiz scheme settled the case in 2003, and part of the settlement agreement included the setting up of a compensation scheme for victims, with a fund totalling $20m.
However, according to the FTC, it is likely that claims on the scheme will total $140m, with the result that individual cash payments – which will be made to victims pro rata – will be small.
UK consumers who think that they may have fallen victim to the scheme should make a claim through the Skybiz redress site.
Copyright © 2005, OUT-LAW.com
OUT-LAW.COM is part of international law firm Pinsent Masons.
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