ACCC takes action against hearing aid retailers for misleading pensioners

6 September 2018

The ACCC has commenced proceedings against hearing aid retailers Oticon Australia Pty Ltd and Sonic Innovations Pty Ltd, alleging that both businesses made false and misleading representations to pensioners in advertisements for hearing aids supplied under the Australian Government Hearing Services Program.

The advertisements were published on 85 occasions in newspapers around Australia from June to November 2017 under the AudioClinic and HearingLife brands. Oticon and Sonic sold more than 10 000 of the advertised Oticon Ria2 and Sonic Cheer20 hearing aids.

Oticon and Sonic have admitted that they made the false and misleading representations in the AudioClinic and HearingLife advertisements and agreed to consent orders in the Federal Court, including declarations that they have contravened the Australian Consumer Law, and to make joint submissions in relation to the imposition of penalties totalling $2.5 million.

Oticon and Sonic have also committed to offer refunds to customers who purchased additional equipment to use with the advertised hearing aids.

The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.

Oticon and Sonic have admitted that the AudioClinic and HearingLife advertisements contained the following false and misleading representations:

  • In order to obtain a free hearing aid pensioners had to book a free hearing test at an AudioClinic or HearingLife hearing clinic before the deadline in the advertisement, when in fact there is no deadline to obtain a fully-subsidised hearing aid under the Hearing Program.
  • The free hearing aids included wireless technology that would allow users to connect them to digital devices like televisions and mobile phones, when in fact this technology was not included with the free hearing aid, but instead required additional accessories which were sold separately at an extra cost.
  • Any user of the advertised hearing aid would no longer miss any conversations, when in fact this may depend on a person’s individual circumstances and the nature of his or her hearing impairment.

“Hearing aid advertisements have a powerful effect on purchasing decisions. The ads must be accurate and truthful, especially given that many of the people buying hearing aids may be vulnerable due to their age,” ACCC Commissioner Sarah Court said.

“The AudioClinic and HearingLife advertisements were targeted at pensioners. Consumers who receive hearing aids under the Hearing Program are, on average, aged in their late seventies.”

“This action is part of our broader work to address some concerning practices in the industry after we first put hearing clinics on notice about our concerns in 2017. We encourage consumers to shop around for the best deal, compare offers, and choose a hearing aid that is right for their needs. We expect to make a further announcement about enforcement action against another hearing clinic shortly,” Ms Court said.

Example of Oticon Ria2 advertisement:

Background

Oticon and Sonic, owned and operated by William Demant Holding A/S, operate over 200 hearing clinics across Australia, including under the AudioClinic, HearingLife, Western Hearing Services, and Adelaide Digital Hearing Solutions brands.

On 3 March 2017, the ACCC released a report Issues around the sale of hearing aids to encourage the industry to reconsider commissions, disclosure and sales practices in the context of the Australian Consumer Law.

Australian Government Hearing Services Program

Around 80 per cent of hearing aids supplied in Australia are provided under the Australian Government Hearing Services Program.

The Hearing Program provides access to subsidised hearing services and devices to eligible persons, such as pensioner concession card holders, veterans, and defence force personnel. Vouchers can be used to obtain fully-subsidised hearing devices, or to cover some of the cost of partially-subsided hearing devices, with the consumer paying the remainder of the cost directly to hearing clinics.

The Hearing Program is administered by the Department of Health. Around 300 providers, including Oticon and Sonic, are accredited by the Department of Health to provide hearing devices to voucher holders under the Hearing Program.

Release number: 
MR175/18
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