Oklahoma-based Skybiz operated between 1998 and 2001, ostensibly
selling a work-at-home business scheme in which consumers were
asked to buy an e-commerce 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 $20
million.
However, according to the FTC, it is likely that claims on the
scheme will total $140 million, 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.
