Safety Compliance Pty Ltd and individuals ordered to pay penalties for misleading small businesses

23 December 2015

The Federal Court has ordered that Safety Compliance Pty Ltd (Safety Compliance) pay penalties totalling $515,000 for making false or misleading representations to small businesses in connection with the supply of safety wall charts and first aid kits.

In her judgment, Justice Farrell stated that Safety Compliance’s business model was “a systematic and deliberate scam targeted at potentially large numbers of people in small businesses across Australia.”

The Court also ordered that the three individual respondents associated with Safety Compliance – Dean King, shadow director, Shane Black, general manager, and Fiona Schimmel, a director – pay penalties of $125,000, $30,000 and $10,000 respectively for their involvement in certain of the contraventions, and disqualified Mr King from managing a corporation for a period of 8 years, Mr Black for a period of 30 months, and Ms Schimmel for a period of 18 months.

In making these orders, Justice Farrell took into consideration Ms Schimmel and Mr Black’s role in providing direction to Safety Compliance’s sales staff to make false representations to small businesses, as well as Mr King’s prior involvement in similar previous conduct and the deliberate steps he took to obscure his involvement in Safety Compliance.

“The ACCC’s enforcement action in this case shows that it takes scam conduct affecting small businesses seriously,” ACCC Deputy Chair Dr Michael Schaper said.

“The Court’s decision to impose penalties and banning orders against the individuals for their involvement in this scam sends a strong deterrent message that conduct of this nature is unacceptable, and that individuals will be liable for their involvement in such scams.”

The Court also imposed injunctions restraining the individual respondents from engaging in similar conduct for a period of five years, and orders the respondents, jointly and severally, to pay a contribution of $315,000 towards the ACCC’s costs.

Background

Safety Compliance sold wall charts and first aid kits to small businesses through telemarketing calls. It also promoted its products on its website.

The conduct of Safety Compliance was first raised with the ACCC by NSW WorkCover in December 2010.

On 7 November 2011 the ACCC issued a public warning notice in relation to Safety Compliance because the ACCC had reasonable grounds to suspect that Safety Compliance’s conduct may constitute contraventions of the Australian Consumer Law.

On 13 March 2015 the Court declared that from about June 2010 until June 2012 Safety Compliance had engaged in misleading or deceptive conduct and made false or misleading representations that workplace safety laws required businesses to maintain workplace wall charts and first aid kits of the same nature as those sold by Safety Compliance when in fact the laws did not.

The Court also held that Safety Compliance falsely represented to consumers that it was affiliated with or actually was a workplace health and safety agency, and that it had falsely represented to a group of franchisees that the franchisor had agreed to purchase its products. Dean King, Shane Black, and Fiona Schimmel were also held to have been knowingly concerned in certain contraventions of the Australian Consumer Law by Safety Compliance.

See also: Federal court finds Safety Compliance misled small businesses into purchasing safety products

Release number: 
MR 274/15
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