The Federal Court in Sydney has found that the Spanish-based company, European City Guide S L, trading in Australia as Industry and Commerce, misled Australian small businesses into signing up with its online business directory.
The Court found that between 2006 and 2009, Industry and Commerce engaged in misleading or deceptive conduct in breach of section 52 of the Trade Practices Act 1974*. The Court has ordered Industry and Commerce not to claim or seek a payment for online directory services from any Australian businesses that received and completed one of the ECG Forms which contained the representation. Industry and Commerce is also required to pay 98% of the ACCC’s costs.
“These orders mean that Australian businesses who were misled by Industry and Commerce with these forms do not have to pay,” Deputy Chair Peter Kell said today.
“This outcome sends a clear warning to overseas operators targeting Australian businesses. They are subject to Australian laws and will be pursued if they break those laws.”
“Small businesses are often the target of unscrupulous operators who capitalise on a busy office environment”, Mr Kell went on to say. “Important details in carefully crafted letters are easily missed in the fine print or misconstrued because of the use of well-chosen graphics. In the Industry and Commerce matter it was the misuse of the Australian flag that suggested a connection with a government agency”.
The Court declared between 2006 and 2009, Industry and Commerce wrote to Australian businesses asking them to update or check that the information on the Register of Business Information was “positively and correctly presented”. The forms sent by Industry and Commerce represented that the Register of Business Information was a record of the Australian Government and, for some of that time, represented that the Register would be free to update, when this was not the case.
Businesses that completed the forms were pursued by Industry and Commerce for fees of between $1200 and $1600 per year for a minimum of three years. Businesses who tried to cancel the service, which amounted to a listing on an Industry and Commerce website, were threatened with debt collection and legal action.
In his judgment, Justice Moore said:
“A charitable person would describe [European City Guide]’s conduct as an opportunistic exploitation of consumers. A less charitable person would probably use more robust language”.
Businesses receiving unsolicited offers should be wary. “If a telephone call or an ‘invoice’ is received that comes from a publication you have never heard of, or that you don’t remember putting an entry in, don’t pay or give out your details until you have looked into the matter further” Mr Kell said.
More information on directory and small business scams, as well as tips on how to avoid them can be found on the ACCC’s Scamwatch site at www.scamwatch.gov.au.
* On 1 January 2011 as part of the Australian Consumer Law amendments the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010. Legal action was initiated in 2009, before pecuniary penalties for misleading conduct were available.