StoresOnline International Inc, Galaxy Mall Inc and Mr Brett Perkins
ss. 52, 53(aa), 53(c), 55A, 59: Alleged misleading and deceptive conduct and false or misleading representations in relation to the sale of e-commerce website packages
1 June 2005: The ACCC instituted legal proceedings in the Federal Court, Sydney, against StoresOnline International Inc, Galaxy Mall Inc and a Gold Coast resident, Mr Brett Perkins alleging misleading and deceptive conduct and other contraventions of the Trade Practices Act by StoresOnline over the sale and promotion of home business e-commerce software packages to participants of seminars or workshops it offered in Australia. The ACCC also alleged that Galaxy Mall was knowingly concerned in the alleged breaches by StoresOnline. The seminars are known variously as Internet Cashflow Conferences or Internet Marketing Conferences.
On 1 June 2005 Justice Emmett of the Federal Court gave the ACCC the following orders on an ex-parte basis:
an injunction preventing StoresOnline, Galaxy Mall and Mr Perkins from transferring funds outside the jurisdiction of Australian courts, pending further hearings on the case
an order that, prior to the commencement of all remaining seminars or workshops to be conducted by StoresOnline in Australia, StoresOnline inform participants that the ACCC has commenced proceedings in the Federal Court of Australia seeking orders restraining StoresOnline from making misleading or deceptive representations.
StoresOnline is incorporated in Utah in the USA, and does not have any registered offices in Australia. Galaxy Mall is a registered foreign corporation. Brett Perkins is the Australia representative of StoresOnline.
3 June 2005: Justice Wilcox continued the earlier injunctions with the consent of the respondents to 8 June 2005.
8 June 2005: Justice Moore continued the earlier injunctions again with the consent of the respondents. The ACCC was instructed to file its statement of claim and amended application by 29 June 2005.
In these proceedings the ACCC is seeking:
declarations that the conduct of StoresOnline breached the Trade Practices Act
orders intended to restrain StoresOnline from making a number of alleged misleading and deceptive representations to participants at seminars or workshops conducted in Australia, including:
using a StoresOnline package a customer could establish a profitable e-commerce business quickly and with only limited previous computer or business experience
the StoresOnline package for the purposes of setting up websites was easy to use
no previous computer knowledge or experience with the Internet was necessary to set up websites using a StoresOnline package
StoresOnline would provide accessible and prompt technical support to purchasers of the StoresOnline package
the StoresOnline package contained all that purchasers could reasonably require to set up and operate a profitable e-commerce business
StoresOnline would set up and design websites purchased as part of the package
the StoresOnline package was adapted for the purpose of operating e-commerce websites from Australia
orders restraining StoresOnline or Brett Perkins from disposing of assets until further order of the Court.
The ACCC has also advised the respondents that, if findings are made by the court, it will apply for damages under s. 87(1B) of the Act on behalf of consumers mislead by the conduct.
27 September 2005: Interlocutory hearing to determine issues related to access by an expert witness to the respondent’s website and software.
28 February 2006: Moore J granted the applicant leave to file and serve an amended statement of claim and also made orders to all parties regarding issuing, filing and responding to interrogatories, defences, lay affidavits, expert reports and evidence. The matter was fixed for hearing for 10 days commencing 29 May 2006 to 9 June 2006. The parties agreed to conduct mediation in the matter prior to the end of March 2006.
24 March 2006: The parties attended a mediation conference.
24 April 2006: The ACCC accepted s.87B Undertakings from StoresOnline. The matter has been listed before Moore J on 9 May 2006 for his approval of Orders finalising the proceedings.
9 May 2006: The ACCC accepted court enforceable undertakings from StoresOnline International Inc. and StoresOnline, Inc; this concludes the proceedings brought by the ACCC in this matter. As part of the undertaking, StoresOnline:
will offer refunds-the refunds will come from $658,251.53, previously frozen under a Federal Court order to persons who assert in a Statutory Declaration that they purchased a package in reliance on a representation of the kind alleged in the Amended Statement of Claim filed by the ACCC;
has undertaken not to make false or misleading statements about its website packages nor make statements about the future performance of the packages without having reasonable grounds for so doing;
not make statements that the packages are easy to use or can be used to quickly develop a profitable internet retail business unless a further statement is made of other factors which are relevant to their decision to purchase a website package;
only use testimonials from persons who have made a declaration that the statements are accurate and not misleading;
not make representations about the level of customer support available;
will give future customers a three-day 'cooling off' period, and
will contribute to the ACCC's legal costs.
The ACCC had formed the view that representations made by StoresOnline in promoting their website packages were misleading and deceptive in contravention of sections 51A, 52, 53(aa), 55A and 59 of the TPA. The ACCC has discontinued its proceedings against StoresOnline's Australian representative, Mr Brett Perkins.
