05 November 2018
When representing products and services via promotions or offers to consumers, businesses need to be aware of (and look out for) a number of potential issues.
Below, we take a closer look at four Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC) cases of interest in the promotional area from 2018, and offer some key lessons and takeaways.
In ACCC v LG Electronics Australia Pty Ltd  FCAFC 96, the Full Federal Court partially upheld the ACCC’s appeal.
The Full Court found that LG made certain misleading and false representations relating to its customers rights, but dismissed the appeal regarding other LG statements. The Full Court remitted the matter to the primary judge for determination of the balance of relief and any pecuniary penalties.
LG was alleged to have misrepresented remedies available to customers under the Australian Consumer Law (ACL), including that:
It was held LG falsely represented the non-existence, exclusion or non-effect of the ACL consumer guarantees, and engaged in misleading or deceptive conduct.
Headline claims: ‘There is nothing LG can do’ and ‘You will have to pay for the repairs’.
Penalty: LG to pay 40% of ACCC appeal costs for misleading consumer rights representations (Competition and Consumer Act 2010 (Cth) – Schedule 2 – s18(1) and s29(1)(m) of the ACL)
In Australian Securities & Investments Commission v Malouf Group Enterprises Pty Ltd  FCA 808, the Federal Court has ordered Malouf Group pay penalties and $1.1 million in repayments to its customers for false and misleading representations and unconscionable conduct in ‘cleaning’ its customer’s credit history.
Malouf Group’s sales tactics misrepresented the services it could actually provide, and hadn’t taken into account all the facts (including individual customer situations) prior to making the claims.
Further, Malouf Group:
The website and sales representations – which included ‘Our investigation team will open your file and look into it’ and ‘Too many enquires can further damage your file and if we process it tomorrow, we may have to reopen it’ – were unsupported. Further, Malouf Group did not have an ‘investigation team’ and assessment was conducted by the sales representatives.
Mr Malouf, the Director of Malouf Group, was knowingly involved in approving false website content, advertising and sales scripts, and was involved in training and supervision of staff to ensure false scripts were followed.
Headline claims: ‘Voted Australia’s No 1 Credit Repairs Solution Company’ and ‘Let us clean your credit’.
Penalties: A $400,000 penalty for Malouf Group and a $100,000 penalty for its Director for false and misleading representations and engagement in unconscionable conduct (Competition and Consumer Act 2010 (Cth) – Schedule 2 – s18(1), s21, s29(1)(b),(e),(f),(g) and s34 of the ACL)
In Australian Competition and Consumer Commission v Pental Limited  FCA 491, the Federal Court found Pental made false and misleading representations about its White King ‘flushable’ toilet and bathroom cleaning wipes.
Pental’s products were not made from “specially designed material which disintegrated in the sewerage system like toilet paper” and could have caused significant sewerage problems if they were flushed.
Pental co-operated with the ACCC which included the implementation of an ACL compliance training program, and payment towards the ACCC’s costs.
Headline claims: ‘Flushable’ and ‘Simply wipe…and just flush away’
Penalty: $700,000 in penalties for making false and misleading representations (Competition and Consumer Act 2010 (Cth) – Schedule 2 of the ACL)
An investigation by the ACCC found Jenny Craig’s advertisements of ‘lose up to 10kg of weight for only a $10 program fee’ did not adequately disclose that customers also had to purchase food at an additional cost, meaning customers would actually need to spend far more than $10.
Jenny Craig also failed to disclose that a person featured in an online testimonial was a paid employee. Further, Jenny Craig represented that customers’ faulty products refund rights required the customer to notify Jenny Craig within three days and return faulty products within 10 business days in its original packaging, which contravenes the ACL.
Headline claim: ‘Lose 10kg for $10’
Penalty: $37,800 in ACCC infringement notices for false and misleading representations (Competition and Consumer Act 2010 (Cth) – Schedule 2 – s29(1) (f),(i),(m) of the ACL)
The contents of this article have been based on press releases issued by the ACCC and ASIC in 2018. The payment of a penalty specified in an infringement notice is not an admission by the parties involved of a contravention of the ACL or ASIC Act.
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.