According to the ASIC, the Never Ending Stori site tempts investors by offering daily returns of one percent. However, the company is not licenced to operate in Australia.

"Unlike the movie, this story will not have a happy ending for investors. Based on the information we have, ASIC is concerned that this scheme may be a pyramid scheme operation," said Tanzer who pointed out that such schemes are illegal in Australia.

"Pyramid selling is illegal in Australia but most importantly, because the entity is not licensed to offer investments or any kind of financial product, if you send your money to them and something goes wrong, you risk losing the lot," he said.

Central America-based Global Mutual does not have a licence to operate in Australia either and Tanzir warns that investors will have no protection if something goes wrong.

"ASIC has already received complaints from savvy investors who are concerned about the claims made on the Global Mutual Web site… the offshore location of these particular schemes makes it almost impossible for us to do anything," he said.

As the ASIC is powerless to shut down these sites, it decided to name the companies in the hope of dissuading Australians from dealing with the companies.

WHAT IS A PYRAMID SCHEME?

• Pyramid selling schemes are an illegal form of multi-level marketing where participants receive benefits by recruiting other participants to invest money into the scheme.
• The money paid by new recruits enriches those who joined the scheme earlier and are closer to the top of the pyramid.
• Some pyramid schemes involve the sale of goods or services (usually of token value) while the more blatant schemes involve the investment of money only. These schemes often claim to be ‘games’, ‘investment clubs’, ‘self-help schemes’ or the like.
• Once new recruits stop investing in the scheme, the pyramid collapses and those who have invested money, especially the recent recruits, lose out. By their very nature, all pyramid schemes will eventually fail.
• In pyramid sales, people are usually (1) required to pay a fee to join the scheme (participation payment), and (2) promised that they will receive money or other benefits for recruiting further new participants (recruitment payment).

Original Article: ASIC issues online shark alert