Mobile payments and loyalty scheme Aspire Worldwide (AU) Pty Ltd is the subject of an Australian Competition and Consumer Commission investigation into whether the scheme complies with Australian Consumer Law, news.com.au understands.
Aspire is a cashback shopping scheme, where customers (known as franchisees) are asked to pay a joining fee, with the promise they’ll earn a ‘passive income’ once they get small businesses to also sign onto the scheme.
The joining fees range from $3000, to $22,000 as a “coach mentor franchisee”.
One of its founders, UK-based motivational speaker Andy Hansen, was involved in the early promotion in 2011 of the Lyoness cashback scheme in Australia, which iscurrently being sued by the ACCC over allegedly operating a pyramid scheme and engaging in referral selling.
Lyoness denies any wrongdoing and says it will “vigorously defend” the action. A directions hearing was held last month and the matter will resume in February next year.
In defence documents filed with the Federal Court this week, Lyoness distanced itself from Mr Hansen and his associates, Wendy Hansen, Phil Watts and Sally Watts — who referred to themselves as “Global Go Getters” in online training webinars — claiming they were neither employed by Lyoness nor acting on its behalf at the time.
WATCH: LYONESS TORN APART ON DRAGON’S DEN
Aspire, which has a registered office in Perth, has been recruiting members since April 2013 but officially launched its loyalty program at the start of this month.
Participants who sign up are then encouraged to promote the program to retailers and customers, with the stated goal of signing on small and medium enterprises (SMEs) into the cashback scheme to form “micro-shopping communities”.
Several people involved with Aspire say they have complained to the consumer watchdog about the company’s operations in Australia, although the ACCC declined to comment.
An ACCC spokesman said in a statement: “The ACCC is limited in its capacity to discuss matters that may be under investigation or potential enforcement action.”
One former Lyoness member, who did not wish to be named, said she paid $3000 to be part of that scheme back in 2011 after watching Mr Hansen’s training videos. She said watching an Aspire webinar was like déjà vu.
“It’s disgusting, it’s absolutely disgusting,” she said. “I had to turn it off. I couldn’t watch. It’s the same story all over again, it makes me sick. I listened to his Lyoness webinars promising the earth, three times a week — Tuesday, Thursday, Saturday — for months and months. We thought it was legitimate.”
Property developer Kevin Taylor, 64, told news.com.au he lost $6000 all up in the Lyoness program — $3000 paid to Mr Hansen, and a further $3000 to join the Australian Lyoness operation.
“He’s like a cobra — he puts his head up, bites someone, and once he’s bitten them he looks for the next one to bite,” Mr Taylor said.
Members are induced to join the Aspire program on the promise of significant “passive residual income” through a system of commissions from transactions made through SMEs they and members underneath them have signed up.
In one training video dated 20 April 2013, Mr Hansen explains the potential sales commissions by describing a hypothetical situation where an “average business” introduces 200 customers to the Aspire program.
“This means with 200 [customers], if they all only spent £1125 ($A2066) a month with Aspire, then that would be generating £225,000 ($A413,325) a month in revenue within that community,” he says. “That gives an income to Aspire of £11,250 ($A20,666) based on a 5 per cent income, which means you get 10 per cent of that, which is £1125 per month ($A2066).”
He goes on to say a typical member could “easily” be making £100,000 ($A183,737) a year just through introducing eight or nine SMEs into the program. “It’s down to what you’re looking to achieve, working out your goals and objectives and then working backwards,” he says.
In a second training video dated 6 September 2014, Mr Hansen explains that the “franchise fee” will increase to $6116 from next year, while the “coach and mentor fee” will increase to $36,336 from the end of October.
The initial “pre-launch” and “soft-launch” fees were “heavily discounted because you were working on vision and vision alone”, he says in the video. “The price that you and I paid over the last 15 months was blood, sweat, tears and frustration.”
One senior figure in the direct selling industry, who did not wish to be named, described the Aspire program’s high fees as “absolutely shocking”. “You just need to look at the basic plausibility of what’s being offered,” he said.
The source said it was often hard to determine where the money was coming from or going to in these kinds of programs. “If members are making nothing out of the use of the card, and they’re reliant on rewards tied to recruitment, then you’ve got a problem,” he said.
“The only way you can ever get to whether that’s the case is examining the commerciality of the venture — and if it quacks like a duck …”
Gerard Brody, chief executive of the Consumer Action Law Centre in Melbourne, said “at the very least” Aspire should be investigated, in his opinion.
“Consumers should be wary of any business that claims you can get ahead or rich by solely using their products or services or by recruiting new people into the business,” he said.
“Claims such as ‘there’s an easy way to generate passive income’ should be questioned. Also, schemes that involve different business entities at different levels such as multi-level franchising can create additional complexities if things go wrong — it can be very difficult for consumers to get a remedy.”
In an email to news.com.au, Mr Hansen, who goes by the title “Master Franchisee”, said Aspire had granted 573 “franchise licenses” in Australia, with more than 60 SMEs signed up to a pilot program in three “micro-shopping communities” in Western Australia, with a goal of 75,000 businesses signed up by the end of 2015.
The Aspire mobile payments system functions as what’s known as a stored-value arrangement. While sector-specific stored-value arrangements are not prohibited in Australia, they are rare.
As one payments industry figure told news.com.au: “One reason for this is that the ‘mainstream’ payments infrastructure, based on ADI [Authorised Deposit-taking Institution] accounts — that is, transaction accounts or credit card accounts with an authorised deposit-taking institution such as a bank, building society or credit union — is ubiquitous, efficient and relatively cheap.”
Depending on the form the Aspire payments system takes, it may fall under the statutory definition of a ‘purchased payments facility’, which would require an ADI license to be granted by the Australian Prudential Regulation Authority.
The only APRA-licensed ADI which falls under the purchased payments facility category is PayPal Australia. APRA would not confirm whether Aspire has applied for an ADI license.
News.com.au invited Mr Hansen and Aspire to further comment on this article but they did not respond prior to publication.
Consumers who feel concerned about their membership in such schemes should contact either the ACCC or their local fair trading authority.
Originally reported by: news.com.au
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