The Federal Court has declared that documents used by a company to solicit customers for its online business directory were likely to mislead businesses receiving them. The company also engaged in conduct likely to mislead or deceive and acted unconscionably in demanding payment for these services.
In the Federal Court, Brisbane last week, the Australian Competition and Consumer Commission obtained orders by consent against Australialink Pty Ltd, its director Rachel Dargie and general manager Desmond O'Keefe.
Australialink, which is based on the Gold Coast, publishes a number of online business directories, including the Australian Business Pages Directory. Each year it sends out more than a million directory requests to businesses across Australia.
The court declared that between January 2006 and June 2008, Australialink, through Ms Dargie and Mr O'Keefe, solicited customers for its directory listing services by sending out a document called a "Listing Advice Notice" (LAN) to a number of businesses. The LAN gave the misleading impression that businesses had already sought Australialink's services or had an existing business relationship with it. Once businesses signed and returned the LAN they would be invoiced $195.00 plus GST.
The court also declared that Australialink, along with Ms Dargie and Mr O'Keefe, acted unconscionably and with a lack of good faith towards businesses by intentionally misrepresenting that it had instituted, or was in the process of instituting, court proceedings against those businesses that had been invoiced for the listing but had not paid.
Australialink has been ordered to write to each person it invoiced between January 1 2007 and December 3 2008, notifying them of the proceedings brought by the ACCC, outlining the court's findings and advising that they may have a private right of action to seek compensation if they consider they have suffered loss as a result of Australialink's conduct.
In addition, the court:
- granted injunctions restraining the three respondents from using the documents concerned or being involved in similar conduct for a period of seven years
- ordered that Ms Dargie and Mr O'Keefe attend trade practices training, and
- ordered that the respondents pay the ACCC's costs.
The granting of injunctions follows on from undertakings given to the court in December by Australialink. The company undertook to cease using the document used to represent that it had commenced or was in the process of commencing legal proceedings, and to alter the wording used in the LANs.
"This is a great result for small businesses that are constantly flooded with unsolicited requests to sign up for directories or advertising," acting ACCC chairman, Peter Kell, said today.
"Some companies design these requests to slip under the radar of businesses that don't realise what they are really signing up for. They are misled into thinking that they have previously requested the product or service or that they will not be charged for confirming their details. Often businesses aren't aware they have been misled until they receive a bill in the mail."
On a similar front, the ACCC recently warned small businesses to be vigilant after a spike in complaints about unsolicited letters that may appear to be trade mark renewal notices. Last month, the ACCC noted more than 150 complaints and inquiries had been received about trade mark letters.
Businesses should ensure they have sufficient safeguards in place to protect themselves from directory and similar scams. Remember to:
- read any documents that are sent to you carefully before signing and returning them
- make sure that the business is one that you normally deal with
- never give out or clarify any information about your business unless you know what the information will be used for
- try to avoid having a large number of staff authorised to make orders or pay invoices, and
- consider whether the service offers value for money: how likely are potential customers to find this directory and see your listing?
For further information on how to identify and protect against directory and advertising scams go to the SCAMwatch website, www.scamwatch.gov.au.