A phony Internet investment "scam" undertaken by the Australian Securities and Investments Commission (ASIC) has cost a Sydney assembler "about $100,000", it was claimed last week.
Kurt Brunning, sales and marketing director for wholesaler MBI Computers, said the whole affair has been very damaging to the good name of the company and the brand of PCs it markets.
"I am more than a little annoyed about this," said Brunning. "The governing body that is supposed to look after the protection of business names has let us down badly.
"The name MBI was repeatedly used in association with words such as 'scam' and 'rip-off' and that is not acceptable," he said. "I would say the bad publicity has cost us at least $100,000 when all things are taken into consideration."
To highlight investment traps on the Internet, ASIC developed a Web page earlier this year to attract investment in a manner that could be used by real-life con artists. The Web site attracted pledges of over $4 million from unsuspecting investors taken in by the chance to make money with a fictional com-pany called Swiss MBI (Millennium Bug Insurance).
Intentions to invest amounts of $10,000 and $50,000 were obtained from 233 separate investors before the scam was unveiled as a promotional ruse. A media circus ensued with everybody being told how silly they were to believe in the fictional MBI company.
When speaking to the media and even in its own press releases, the non-existent company was only referred to by ASIC as MBI. The main damage was done when a representative of ASIC appeared on Channel Nine's A Current Affair talking freely of MBI as being "a joke", "phony scheme", "Internet insurance scam" and "fake".
While Brunning accepts the $100,000 estimate he places on the damages caused is "very hard to quan-tify", he is also convinced the figure is a "conservative" one.
"This story was circulated very broadly and we have had a lot of feedback from our buyers that they have been taking questions from their customers about the MBI brand as a result of ASIC's warning," he said.
"Any inference that a brand is less than legitimate is cause for concern because it can immediately trigger a negative buying emotion that makes people look at other brands," he said.
In a press statement, ASIC apologised for the episode and clarified there is "no connection" between ASIC's bogus campaign company name, Swiss MBI, and the legitimate MBI Computers. It also presented MBI Computers with a letter for circulation to its customers.
He said the kerfuffle thwarted plans to penetrate Victorian markets. Legal advice suggested he is in a good position to sue, but Brunning said MBI has only requested ASIC make a formal public apology and place newspaper display advertisements in its two major markets. ASIC has agreed to do so.