Court orders corrective ads by Commonwealth Bank

The Federal Court has made declarations that the Commonwealth Bank of Australia contravened the Trade Practices Act 1974 and ordered them to publish television and in-branch corrective advertisements.

The terms and the orders were agreed to by the parties and followed the Federal Court finding on 17 October 2003 that television and in-branch advertising by the bank breached various sections of the Act. 

Although the ACCC had sought an injunction restraining the bank from advertising in a similar manner in the future, the court did not consider an injunction necessary in these circumstances.

The Cricket Home Loan Campaign ran from 22 November 2001 to 27 January 2002 as part of the bank's "no regrets" themed advertising. The advertisements grabbed attention with bold headlines that "no establishment fee" was payable for a home loan. In fact, customers had to either already hold or obtain additional bank products to take up the offer of "no establishment fee".

The court ruled that the advertisements were misleading and deceptive as a number of customers responding to the "no establishment fee" campaign did, in fact, have to pay an establishment fee. They incurred a fee because they did not hold additional bank products. 

The court made the following orders about the form and scope of the corrective advertising:

• in-branch – corrective posters to be displayed near the front of every branch of the bank for one week
• television – corrective advertising to be aired on 18 occasions in Brisbane, Sydney, Melbourne, Adelaide, Perth and regional Australia.

"The orders show that misleading advertising can be costly. An advertiser may have to correct that advertisement at significant cost. It pays for an advertiser to get the message right the first time", ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC will continue to monitor advertising closely to ensure that advertisers honour their promises and are upfront about important conditions".

BACKGROUND

The original advertisements were broadcast during cricket telecasts in late 2001 and early 2002. The advertisements featured cricket spectators and a cameraman doing things they would later "regret" and promoted the bank's home loan as "something you won't regret". Prominently displayed during these advertisements was the caption "No establishment fee". In fine print at the bottom of the advertisements were the words "Limited offer for selected Home Loans. Other fees and charges are payable. Minimum loan amount and conditions apply".

In-branch advertising also carried "no establishment fee" captions in bold text, with footnote conditions saying "Fees and charges are payable. Conditions apply".

To obtain a home loan without paying an establishment fee prospective home loan customers had to either currently hold, or take out, additional bank products such as a credit card, deposit account, combined home and contents insurance policy or mortgage protection insurance.

The ACCC alleged that the clear impression conveyed by the advertisements was that customers applying for these home loans who met standard home loan requirements (such as creditworthiness) would not incur an establishment fee.

The ACCC alleged that the fine print conditions were inadequate to dispel that impression.

The ACCC's court action followed complaints from prospective home loan customers that they would have to pay an establishment fee despite the "no establishment fee" promotion.