The high-end investment fund Mayfair 101 launched a website comparing its products to bank term deposits last month, after the corporate regulator had enlisted the help of Google to block search traffic to a similar Mayfair-run site.
On Monday, the Australian Securities and Investments Commission began legal action against Mayfair 101, the firm behind the ambitious redevelopment of Queensland’s Dunk Island, claiming its advertisements are misleading and deceptive.
The regulator’s case centres on advertisements and websites run by Mayfair that compare its products to term deposits, including claims it can provide favourable rates of return.
The decision to take legal action follows two years of investigations into the Mayfair 101 group.
Last month Asic raised concerns that a website run by Mayfair, termdepositguide.com, made claims its products were similar to term deposits.
The site encourages people to switch their money from a term deposit to a Mayfair investment product. It carries a fine-print disclaimer that Mayfair’s investment products are “not the same” as a bank term deposit and might be seen as carrying a higher risk.
Cached versions of the termdepositguide.com site show it was previously online from July to October 2018, and offered to connect Australians with “term deposit money” to options for “alternate investment products”. Mayfair would not say whether it ran the site at the time.
The site has been marketed via paid advertising to Google, which meant it showed as a top sponsored result for searches of “term deposit” and “bank term deposit”.
Asic wrote to Google, which removed the site from its search results. Mayfair then added the disclaimer.
As recently as Sunday night, advertisements for the site continued to appear on YouTube, which is also owned by Google.
On 21 March the domain for a new site, tearupyourtermdesposit.com, was registered. The site, which listed Mayfair 101 as its owner, published similar content comparing term deposits to Mayfair’s investments. The page appeared prominently in Google search results for term deposits last week. It has now been taken offline.
Asic’s concerns about Mayfair relate primarily to its attempts to market itself to investors; its products are only available to so-called “wholesale” investors who have assets of at least $2.5m or are able to tip $500,000 into a single investment, though Mayfair 101 has advertised heavily in mass circulation newspapers, including Brisbane’s Courier Mail.
In a concise statement of claim, filed with the court, Asic objected to the use of phrases including “term deposit alternative”, “certainty” and “confidence” in promotions for the products.
It also objected to Mayfair 101 marketing the products using Google Adword keywords including “bank deposits” and “term deposits”, as well as metatags – keywords on pages that are not displayed but are used by search engines to categorise websites – including “term deposit rates – best term deposit options”.
The products “were marketed to wholesale but inexperienced investors, at least a substantial subset of whom were unlikely to understand the significant risk associated with them”, Asic alleged.
It also alleged Mayfair 101 “made representations to consumers that the Mayfair products were comparable to, and of similar risk profile to, bank term deposits” when they actually had a higher risk.
Bank term deposits are issued by large financial institutions and protected by a government-run financial claims scheme while Mayfair’s products are issued by a privately-owned group that invests in real estate and technology companies and have no government safety net.
Mayfair 101 referred Guardian Australia to an online statement regarding the Asic legal action. It said the group maintains its financial products are “fully compliant” with the law and will contest the Asic proceedings.
“Mayfair 101 has cooperated with all Asic’s information requests and has already added additional information to its website and materials to further ensure investors are fully informed about the risks and rewards of its investment products,” the statement said.
“The Mayfair 101 group will contest Asic’s claims in full.”
The legal proceedings relate specifically to two financial products – M Core Fixed Income and M+ Fixed Income.
Mayfair froze redemptions of the two products on 11 March, about the same time it began suspending scheduled settlements of up to 60 investment properties it is contracted to buy at Mission Beach, the onshore hub for Dunk Island.
Asic said 12 investors had been unable to redeem $4.4m from their M+ Fixed Income.
Mayfair says the “risks and benefits are clearly stated on all Mayfair Platinum’s disclosure documents”.
“No investor in any of Mayfair Platinum’s products has had a capital loss and all interest distributions have been paid in full.”
