Samuel puts scammers on notice!

The residential property market as a whole is coming under increasing ACCC scrutiny and earlier this year the Federal Court concluded hearing a case instigated by the ACCC against people alleged to have been involved in the two-tier marketing of residential property on Queensland's Gold Coast. The respondents include a marketing company, a finance consultant, a developer, lawyers and a bank. Two-tier marketing is the practice of having two prices; one for locals who know local values and one for outsiders who don’t.

It is alleged that the marketer induced people from other locations to buy Gold Coast properties at prices inflated by marketing fees of thousands of dollars by presenting the second-tier price as fair market value.

The ACCC took action on behalf of a Cairns couple who, it is alleged, paid some $60,000 above fair market value because of hidden marketing fees and additional profit for the developer.

The hearing concluded on July 11 this year and Justice Kiefel is yet to bring down her judgement.

The ACCC has sought findings and declaratory relief that creates a precedent so that aggrieved purchasers may be armed with court findings that enable them to take their own action.

ACCC investigations into property scams include advice given by property consultants, solicitors and valuers, unconscionable conduct by financial institutions and real estate investment seminars.

We have a particular concern that small investors and superannuants are being pressured into deals that promise great wealth but may leave them heavy in debt.

Extra resources have gone into this area and there are schemes under investigation with a view to court action.

The ACCC is also investigating whether agents are directing investors to financial consultants, solicitors and valuers without disclosing that they are not independent.

The property boom has produced its share of scam merchants wanting to cash in on the rush for investment houses and units. This is a time for potential purchasers to remain calm. They should never purchase property in another location without checking local values, and approach investment seminars with an open mind refusing to take what you hear for granted. Always seek a second opinion from a professional.

I urge consumers who believe they have been misled about property schemes at seminars or when making a purchase to contact the ACCC infocentre on 1300 302 502 at the cost of a local call.

People seeking to lodge complaints should note that the Australian Securities and Investments Commission (ASIC) is responsible for consumer protection matters relating to financial products and services. This includes home loans, mortgages, insurance and financial advice.

*By Graeme Samuel, Chairman of the Australian Competition and Consumer Commission.