It is thought that Australian investors have lost up to $5 million after a cashback shopping scheme collapsed, leaving hundreds out of pocket.
Go Aspire Ltd, formerly Aspire Worldwide, has gone into insolvency months after investors’ so-called “franchise agreements” — some of which had been purchased for hundreds of thousands of dollars — were exchanged for shares in the now worthless company. Aspire was run by two husband-and-wife duos — founders Andrew Terence Hansen, 47, Wendy May Hansen, 45, Philip Gordon Watts, 68, and Sally Anne Watts, 52.
Nobody knows exactly how many investors have lost money, with the current count at almost 700. But one investor who is compiling a database fears that it might be more than a thousand.
Aspire, which deregistered its Australian arm late last year, purported to be a cashback loyalty scheme into which members, who paid between $3000 and $30,000 to join, were enticed with promises of earning money for doing nothing.
Members were promised they could earn so-called “passive income” by signing small businesses up to the payments system to create “micro shopping communities”, while also earning commission for signing up other members.
In theory, customers would be encouraged to make payments at participating stores using the Aspire system. The commission paid to the Aspire franchisee who signed up the store would be charged instead of a credit card processing fee.
The franchise agreements supposedly gave the holder the right to sign up small businesses in their local area. In one promotional video from 2013, Mr Hansen claimed a typical investor could “easily” be making more than $180,000 a year just by signing up eight or nine small businesses into the scheme.
The Victims of the Scheme Speak
Adrian Simule, from Dandenong in Victoria, left his successful trade as a self-employed caulker in the hope of becoming a business coach with Aspire.
He bought in initially for $1600 and went about recruiting other members. “Then they started offering coach and mentor franchises for $22,000, then $26,000,” he said. “[Those people] would basically be allocated the clients. They were saying, it’s a second-to-none type of deal, no one else offers this.”
He ultimately ended up spending just under $30,000, plus lost income and travel costs.
“I spent my mortgage deposit money,” he said. “I could have bought a house. I’ve lost the majority of my clients. People I used to be quite close to don’t want to have anything to do with me because I was going around promoting Aspire. I even got my mum involved.”
Mr Simule says his “world has come crashing down”. “I’m [nearly] 30 years old now, by this point I should already be going somewhere. I don’t have anything to my name besides my car,” he said.
Sue from Henley Brook in Western Australia says she remortgaged her house to raise the $23,000 to buy into Aspire. She, too, quit her job with the dream of becoming a business coach. At one point she even sold all her jewellery, including her wedding and engagement rings, figuring that “when the money started coming in, I would buy the most expensive jewellery I could afford to replace them”.
How Aspire marketed to its investors.
The 46-year-old, who preferred not to use her last name, says she earned just $500 for the entire year of 2015. “People have lost life savings, borrowed money from family members. It doesn’t matter if you put in $1000 or $500,000, it’s not right,” she said.
“They’re very clever people. That money is gone. For me it’s not about the money anymore, I just don’t want them to do this to somebody else.”
One Perth businessman, who did not wish to be named, lost more than $300,000 buying multiple coaching licenses. “The business concept looked great but the actual technology wasn’t working like they were claiming,” he said.
“The product was basically the internet banking system that was going to be converted into an app. Very clumsy. They were supposed to spend millions of dollars on the development of it and they didn’t. They sold the franchises before the product was actually finalised and developed. They were selling agreements way before there was anything in place.”
“It’s an emotional mess, financial mess, relationship mess, business mess. It was all smoke and mirrors,” he said. “Some people have lost their jobs, quit their jobs, can’t get loans anymore, have lost relationships and friendships.”
He says the majority of his time was spent recruiting other franchisees — “multi-level marketing stuff” — and giving presentations to small business owners to convince them to sign up.
Lisa Smith, 43, a single mother from Perth, lost $29,000 in the scheme. “We were told we were going to be making $49,000 a month,” she said. “They said we’d get paid to do public speaking, we’d get exposure all over the world. We got told so much stuff, you feel like a bit of an idiot looking back on it.”
Gerard Brody, chief executive of the Consumer Action Law Centre, said the case highlighted the need for provisions around pyramid selling under the Australian Consumer Law to be reviewed.
“It does seem that pyramid scheme is defined too narrowly under the law,” he said.
“I’ve said before these multi-level marketing schemes can be very risky and it can be very hard to get your money back if things go wrong, and that’s what has played out here.”
Gerard Brody of the Consumer Action Law Centre.
The Australian Government is currently undertaking a review of the ACL, with an issues paper just released and a final report due late this year or early next year.
Mr Brody says that will be too late for the victims of Aspire. “The provisions need to be broadened to capture these types of schemes to make them unlawful. At the moment it is too hard to successfully prosecute them,” he said.
If It Sounds Too Good To Be True…
….then it probably is. The difference between good advice and bad advice could potentially be your home, your life savings, your job and your ability to earn future income. None of these things are worth being gambled upon.
So How Do You Choose the Right Advice?
Make sure you ask questions of anyone who is offering you advice.
How long have you been a planner? -The first part is easy. If the planner you are looking to engage has less than 7 years practicing experience then you probably have not got the right person to look after your life savings.
What products are you able to sell? -Ensure that the planner you are considering is not restrained by the selection of products solutions they have available to provide you.
What are your education and qualifications? – Anyone giving you advice should be suitably qualified to do so.
Do you specialise in any particular area of advice? – It is also very important that the firm that you are considering also deal with other clients that have similar goals and interests as you do.
Do you like the Planner? – Once you have decided to meet with a planning firm then make sure that when you are dealing with the actual planner for the first time that you feel comfortable with them as an individual.
How much does their advice cost and what do I get for it? – Just prior to the initial engagement of a planner, you need to fully understand the total cost of the services will be provided.
Sleep Test? – If you can’t sleep at night, you need to ask yourself why.
If you are searching for peace of mind and a long term professional relationship with a financial planning firm, contact us today. We have financial planners all across Queensland who can assist you.