Consumer protection bodies across Australia have joined forces to launch a national campaign aimed at highlighting the practices used by spruikers, in particular the offering of property education seminars.
“There are many cases where people have signed up to deals during these property investment or ‘wealth creation’ seminars and have lost money. They have paid a lot of money for advice and coaching but not realised the returns they were promised,” Western Australian Acting Commissioner for Consumer Protection David Hillyard said.
“While there are legitimate companies that offer credible property investment advice and opportunities, equally there are a number of rogue operators that can apply high pressure sales tactics at ‘free’ seminars to persuade people to sign up on the spot,” Hillyard said.
Campaign ambassador and finance expert Paul Clitheroe said there are some obvious signs that people should be on the look-out for if they choose to attend a seminar and said the deals offered at during the events often come back to bite investors down the track.
“You wouldn’t get medical treatment from someone offering the same remedy to everyone in a room so be wary of the property spruiker who sells the same ‘investment’ scheme to everyone at a seminar,” Clitheroe said.
“Basically, the spruikers are just in it for themselves and accept generous commissions once the deal is done. The investor is then left with what is probably a dud deal more likely to lose money than make it,” he said.
Investors should also be wary of being rushed into making decisions or signing contracts, deals where the spruiker supplies mortgage broking, conveyancing, settlement or tax advice and spruikers offering personal loans or credit to help you pay the enrolment fees for training courses.
People should also be sceptical of investment strategies that put their home at risk by using the equity to borrow significant money to invest, spruikers who side-step questions or downplay the risks and costs involved and the suggestions that an investment scheme or system is ‘government approved’ by frequent reference to the Australian Taxation Office (ATO) or Australian Securities & Investments Commission (ASIC).
Source: WA Consumer Protection
Hillyard also warned the public to be apprehensive about rent-to-buy schemes, a strategy that is often promoted by spruikers.
“In some cases, seminar attendees might be taught how to sell or promote a rent-to-buy scheme. These schemes are fraught with danger and target people who are desperate to get into the housing market as well as people who are finding it difficult to sell their home,” he said.
“Rent-to-buy schemes involve purchasers paying a deposit as well as a premium on top of their rent with the hope they will eventually buy the property, but in reality they often lose their money, as they can’t get finance to complete the sale and finally breach the strict contract terms.”
Hillyard also encouraged people to brush up on their knowledge of consumer law as it may prevent them from making a costly decision.
“The seminars may also be a tactic for organisers to sell expensive training material or courses. If the promotional material doesn’t clearly state goods or services will be sold at a seminar, you will most likely be eligible for a ten business day cooling-off period under the Australian Consumer Law.
“This means you have the right to cancel any commitments made on the day without penalty for items valued at more than $100. This right may be extended to six months if you weren’t told about this cooling-off period.”
