Offers on the internet

Are you thinking about investing in something you saw on the internet? Before you send your money, here are some things you need to watch out for.

Who are you dealing with?

Find out who you are dealing with. Australian companies must be registered with ASIC. The company must provide us with information which any member of the public can look up. You can run a free safety check to find more information about a company. Here's some information about the free safety checks you can make.

You can run a free safety check on our banned and disqualified persons database for names of directors who have been banned from managing a company. The following link will take you to a new window where you can run a search of our database of banned directors. Search now

Is there a prospectus or product disclosure statement?

Prospectus
You may come across advertisements saying something like 'Please invest in my company. I've got this great business but I need extra capital to expand'.

For most investments in companies you must be given an Australian prospectus that has been lodged with us to look at before you buy. The prospectus must set out all the information that you and your professional advisers would need to make an informed assessment about the investment.

You can check if a prospectus is current by looking at the expiry date. This is usually on the first page or on the front cover of the prospectus.

You can run a free safety check on our OFFERList database to see if a prospectus was lodged with us. The following link will take you to a new window where you can run a search. Search now

A website advertising an investment in company securities, for example shares, should give you details of the prospectus and the date it was lodged with ASIC. It should also tell you how to get a copy. Some companies are now publishing their prospectuses electronically on the internet.

Product disclosure statement
If the investment offered on the internet is for financial products that are not company securities you must be given a product disclosure statement in most cases before you invest in the product. For example, you should be given a product disclosure statement before you invest in:

superannuation products
insurance products
managed investments (such as property trusts, equity (share) trusts, agricultural investment schemes, film schemes and timeshares)
retirement savings accounts
derivatives (such as futures contracts and swaps).

The product disclosure statement must clearly and concisely set out information about the product, with enough detail for you to compare a range of similar financial products so that you can make an informed decision about which one(s) to invest in. A website advertising an investment in these kinds of financial products should give you details of the product disclosure statement and tell you how to get a copy of it.

More about product disclosure statements and which ones we have listed on our database for you to check.

For listed managed investments (that is ones that can be traded on a financial market, such as the Australian Securities Exchange, you can check if a product disclosure statement has been lodged with us. The following link takes you to a new window where you can search our OFFERlist database. Search now

What if the offer is not from a company licensed in Australia?

Many investments on the internet are offered by people or companies based outside Australia and who are not licensed in Australia. We strongly advise you to avoid these investments. If you wish to buy overseas shares or investments, you should deal only with advisers licensed to operate in Australia. If you already own overseas shares or investments, your company may be permitted to offer you new shares or extra units. Your rights as an investor will come under the law of that country.

We work closely with overseas regulators, but it can be difficult for us to fully enforce the law against people based overseas. It can also be more difficult for you to enforce your rights against them.

If you are not sure, speak to a licensed financial adviser. If you do not understand information in a prospectus product disclosure statement or are not sure whether the investment is suitable for you, you should get advice from a licensed finanacial adviser. To find out how to choose the right financial adviser, read our tips on Getting advice.

What if you see something suspicious on the internet?

Please tell us about suspicious investment offers. We would like to stop bogus investment offers from being offered on the internet. Please contact our Infoline by email at infoline@asic.gov.au.

More information

FIDO has lots more to read about investing on the internet

FIDO Website: Printed 07/31/2010