Over $2 million penalties for misleading Energy Watch advertising
The Federal Court today ordered the company formerly known as Energy Watch Pty Ltd (now in Liquidation) to pay $1.95 million for misleading advertising and its former CEO, Benjamin Polis, described by the Court as "the figurehead of Energy Watch", to pay $65,000 for his voiceover role in misleading radio advertisements.
In his reasons for the penalties awarded, Justice Marshall stated:
"Energy Watch deceived the Australian public in a very serious way. Mr Polis did likewise in radio broadcasts in Brisbane. He did so as the figurehead of Energy Watch, thereby giving greater gravitas to the false and misleading conduct than if the radio advertisements had been spoken by a voiceover actor. The Australian people have been misled and deceived by the sharp business practices engaged in by Energy Watch and Mr Polis and they would rightly expect that such conduct not be treated lightly by this Court."
The misleading advertising related to representations about the nature of the Energy Watch service and the savings consumers would make by switching energy retailers through the Energy Watch service.
Australian Competition and Consumer Commission chairman Rod Sims said providers of energy price comparison services, and other comparison services, should take the penalties awarded in this case as a serious warning.
"The ACCC is acutely aware that increasing energy prices are a significant issue for small business and consumers and they are at the very heart of cost of living pressures. Energy Watch took advantage of this to further its business interests.
"The ACCC will take action to protect consumers and the Federal Court will impose significant penalties for misleading advertising. In fact, this decision is the sixth in which the Federal Court has awarded penalties of over one million dollars for breaches of the Australian Consumer Law since civil pecuniary penalties for consumer protection matters was introduced in April 2010," Mr Sims said.
The orders to pay civil pecuniary penalties follow the Court's finding in April 2012 that in an extensive advertising campaign Energy Watch made a number of false and misleading representations in 80 advertisements across various forms of media. The Court found the advertising had:
- falsely represented that the Energy Watch service compared the rates of all or many of the energy providers in a person's area, when in fact it only compared the rates of a person's current energy retailer with those of energy retailers with which the company had commercial agreements in place.
- falsely represented the savings residential and business energy users would save in the 12 months following switching their energy retailer through the Energy Watch service.
The advertising comprised of:
- television advertisements broadcast in Melbourne and Brisbane
- radio advertisements broadcast in Brisbane
- advertisements in The Age and Herald Sun newspapers
- a wrap around to an issue of the AFL Record
- statements on the Energy Watch website and other websites
- billboards in and around Melbourne, and
- advertisements displayed on a scoreboard at the MCG during AFL games in 2011.
Mr Sims said the ACCC has concerns that consumers may be misled about other comparison services in the energy sector.
"There are numerous energy price comparison services and the ACCC will be communicating with them to ensure they do not mislead consumers."