For the first time, the Australian Competition and Consumer Commission (ACCC) has obtained a court order under new remedies to disqualify an individual from running a company.
The Federal Court found that Heartlink company director Laurence Hann engaged in conduct that contravened the Trade Practices Act 1974 (now Australian Competition and Consumer Act 2010).
Mr Hann was banned from managing a corporation for 15 years and the Court imposed a civil penalty of $450 000.
The Court found that Mr Hann, and three firms—Halkalia Pty Ltd, Heartlink Enterprises Pty Ltd, and National Semi‑Retired Group Pty Ltd—engaged in false, misleading or deceptive conduct.
The three firms—which were established by Mr Hann—were marketing and selling ‘Heartlink’ branded products, most of which were household cleaning products.
Between January 2007 and May 2010, Heartlink sold distributorships for the products, for $10 000–$20 000 each, and said in advertisements that the potential earnings were $900–$1600 for 3–4 days work per week. In fact, the potential earnings were much lower and many consumers who purchased a distributorship did not earn any income at all.
The Court imposed several orders upon Mr Hann, including preventing him from carrying on businesses that ask people to invest money or perform work; or from carrying on a business involving the sale of household cleaning products, or to claim profits earned by the sale of goods are donated to charity, for 15 years. He is also disqualified from managing a corporation for 15 years.
He also cannot supply goods or services that are or include household cleaning products.
Further orders by the Court include a civil pecuniary penalty against Halkalia of $450 000, and orders against each of Halkalia, Heartlink, and National Semi‑Retired similar to those imposed on Mr Hann.
Ms Vicki Ann Lowe—who was the sole director of Heartlink Enterprises, and the secretary and shareholder, between 2007 and 2010—was prevented, by order of the Court, from promoting business opportunities where representations are made as to projected earnings of such business opportunities, for seven years.
A Federal Court case has underlined the need for firms making claims about price comparison services, or provider‑switching services, to ensure they are honest and justifiable claims.
The Federal Court has found that Energy Watch Pty Ltd (now in administration) misled consumers in relation to the nature of its energy price comparison service— which was provided online and via a call centre—and the savings that could be achieved using the service.
The case was brought by the ACCC. The conduct that was the subject of the case was the content of print, television and radio, internet, billboard, and MCG scoreboard advertising that Energy Watch published between January and September 2011.
The Court also found that the former chief executive of Energy Watch, Benjamin Polis, contravened the Australian Consumer Law through his role as the voice‑over in the radio advertisements Energy Watch had represented in its advertising that it compared the rates of all or many of the energy retailers in a person’s area. In fact, the service it provided compared the rates of a person’s current energy retailer with those of the energy retailers with which Energy Watch had commercial agreements in place (referredto as its preferred suppliers).
Energy Watch also falsely represented that it had an adequate basis to claim that it had saved residential customers $386 and business customers $1878 in the 12 months following switching through EnergyWatch.
The case also underlines the ACCC’s attention to online conduct. Ensuring that consumers enjoy protection in the online environment is one of the ACCC’s strategic enforcement priorities. The Chairman,Rod Sims, says consumers who are buying goods or services online, or over the phone, should enjoy the same protection under the law as consumers buying via any other type of business.
The Federal Court has heard submissions on penalties in the Energy Watch proceedings. The ACCC is seeking declarations, civil penalties, and costs.
The Energy Watch business was sold in May 2012 and is now operated by another company.
ACCC initiates proceedings in door-to-door selling cases
The ACCC has filed Federal Court proceedings in two sets of cases regarding door‑to‑door sales conduct, including cases which will focus on new provisions in national consumer law.
Proceedings have been filed against Lux Distributors Pty Ltd, alleging unconscionable conduct in relation to the sale of vacuum cleaners.
In the Lux proceedings, the ACCC allegesunconscionable conduct in relation to the sale of vacuum cleaners to five elderly people, between 2009 and 2011.
In another set of cases, proceedings have been filed against AGL Sales Pty Ltd, AGL South Australia Pty Ltd, and marketing company CPM Australia Pty Ltd in relation to their door‑to‑door selling practices in the energy sector.
The ACCC has also instituted separate proceedings against Neighbourhood Energy Pty Ltd (which is part of the Alinta group) and its former marketing company Australian Green Credits Pty Ltd.
The ACCC alleges that the respondents engaged in misleading and deceptive conduct, and that AGL Sales and CPM Australia made a range of false representations to consumers in the course of door‑to‑door selling.
With the exception of AGL Sales, the ACCC alleges that each of the respondents breached the Australian Consumer Law (ACL) by failing to immediately leave the premises at the request of an occupier. The ACCC contends that consumers requested the salespeople to leave by placing a ‘do not knock’ sign on their door.
All of the cases are in line with one of the ACCC’s strategic priorities, namely ensuring vulnerable consumers enjoy the protection of the law.
Labelling claims—particularly in food and food products—remain high on the ACCC’s consumer protection agenda.
In the latest case, The Big Olive CompanyPty Ltd has paid two infringement notices totalling $13 200 for labelling productsas ‘extra virgin olive oil’ when the ACCC considers it wasn’t as described.
Between December 2010 and March 2011, The Big Olive Company supplied nearly three thousand half‑litre bottles of ‘Oz Olio’ oil with a representation of extra virgin olive oil on the front label.
This action by the ACCC follows complaints from the Australian Olive Association that numerous oils being sold in Australia as extra virgin olive oil are not of this quality.
The ACCC commissioned independent testing of seven oils, including four imported products and three domestically‑produced products. The investigation was focused on identifying products which were not extra virgin olive oil at the time of bottling.
The ACCC has completed other labelling cases recently, including one regarding the marketing of beef under a King Island representation when the meat was not actually from King Island—a claim which the Federal Court found was misleading. In another case, a eucalyptus oil supplier paid an infringement notice after the ACCC was not satisfied that its oil was made in Australia, as the label claimed.
