The Federal Court, Perth has declared that Burnan Pty Ltd, trading as Resumé Service, engaged in misleading or deceptive conduct in relation to the promotion and sale of resumé writing businesses to the public. This follows action taken by the Australian Competition and Consumer Commission.
The court declared that Burnan contravened section 52 of the Trade Practices Act 1974 and that Keith Rolston, a director of Burnan, was party to the misleading conduct.
Burnan claimed on its website that purchasers of the business could expect to earn between $43,000 and $96,000 per annum by supplying resumés to the public. The claims were misleading because Burnan was not aware that any purchaser of a resumé writing business from Burnan had at any time earned income in that range.
Burnan also made similar misleading claims about potential income in documents given to prospective purchasers and in newspaper advertisements.
The court also declared that Burnan has breached court enforceable undertakings given to the ACCC on 5 September 2006. Burnan undertook that it would not enter into any agreement with a prospective purchaser of the business unless the purchaser had received independent advice about the business. Burnan failed to comply with that requirement on a number of occasions.
Burnan sold the resumé writing businesses to individuals for $22,000.
"The potential profitability of a small business is a key factor when people are considering whether to buy a business," ACCC chairman, Graeme Samuel, said today. "Those selling and promoting business opportunities have to make credible and sustainable claims about the viability and profitability of the businesses. This is especially so when the potential buyers of the businesses include those working from home or in vulnerable financial positions. Any misleading claims about the profitability of those business opportunities exposes promoters to possible court action."
The court has also made orders to ensure that Burnan and Mr Rolston can only make representations about expected earnings from the business if there are reasonable grounds for doing so.
The court ordered Burnan to publish disclosure notices and to pay the ACCC's costs.