Auscha Corporation Pty Ltd and its former marketing manager Nagarajah Rajkumar made misleading claims about the power-saving ability of its Enersonic Power Saver device, the Federal Court has found.
In 2008 and 2009, Auscha marketed and sold the Power Saver, a device which plugs into a standard electricity outlet and which was purportedly designed to reduce the user's electricity consumption.
In court proceedings instituted in July 2010, the Australian Competition and Consumer Commission alleged that Auscha had made a number of false or misleading representations about the Power Saver in breach of the Trade Practices Act 1974.
The ACCC's case centred on the fact that the Power Saver, a power factor correction capacitor, does not actually reduce the real electrical power consumed by a domestic user. Retail electricity suppliers generally only charge domestic consumers for their use of real electrical power (also known as active power), as recorded by domestic electricity meters. As the Power Saver is not capable of reducing the amount of real electrical power consumed by domestic consumers, domestic consumers cannot save money by using the Power Saver.
The court declared by consent that Auscha contravened sections 52 and 53(c) of the Act, by representing in promotional material to customers that :
- by using the Power Saver, domestic consumers could save up to 24% on their electrical power consumption
- by using the Power Saver and saving on their electrical power consumption, domestic consumers would thereby save money, and
- the Power Saver was designed and engineered in Australia,
when in fact:
- the Power Saver was not capable of reducing the amount of electrical power consumed by domestic consumers as measured by retail electricity suppliers, and therefore domestic consumers could not save up to 24% on their electrical power consumption by using the Power Saver
- use of the Power Saver could not lead to domestic consumers saving on their electrical power consumption as measured by retail electricity suppliers, and therefore domestic consumers could not save money by using the Power Saver, and
- the Power Saver was not designed and engineered in Australia.
The court also declared by consent that Mr Rajkumar was knowingly concerned in each of the contraventions.
Furthermore, the court issued injunctions restraining Auscha and Mr Rajkumar from engaging in similar conduct in the future and made orders that Auscha:
- publish a corrective notice on its website (auscha.com.au)
- send a letter to customers affected by the conduct, and
- pay a contribution towards the ACCC's court costs.
Earlier this month the ACCC accepted a court enforceable undertaking from Bronze Swan Pty Ltd, a reseller of the Power Saver, in relation to similar misrepresentations made by Bronze Swan about the Power Saver device.
ACCC Chairman Graeme Samuel said today: "These actions demonstrate the ACCC's concern to ensure that consumers are not misled into believing that products will save them money on energy costs when this is untrue. Suppliers of these types of devices are on notice that the ACCC is on the look-out for those who want to make spurious energy saving claims and should take immediate steps to review their marketing material or they may face similar action."