The Federal Court of Australia has ordered Multimedia International Services Pty Ltd, trading as The Community Network, to pay penalties totalling $230,000 for breaches of the Australian Consumer Law (ACL) in its dealings with certain small businesses, in proceedings brought by the Australian Competition and Consumer Commission.
The Community Network sells digital advertising services to small businesses throughout Australia. The advertising is presented on branded LCD screens at various sites such as fitness centres, newsagencies, and shopping centres.
The Court declared that The Community Network engaged in unconscionable conduct in its dealings with one small business, including by refusing to release it from its contract for advertising services when The Community Network was not providing those advertising services, then pursuing it for non-payment, threatening legal action and engaging debt collectors. The Court also declared that The Community Network made false or misleading representations to two other small businesses and wrongly accepted payments from them.
“Unconscionable conduct is a priority area for the ACCC, particularly where it affects small businesses,” ACCC Deputy Chair Dr Michael Schaper said.
“The ACCC brought these proceedings because it had received numerous complaints from small businesses that The Community Network was requiring payments to be continued under its contracts, despite not providing the digital advertising services promised. Some small businesses had also complained that they were misled by the failure to clearly disclose the effect of an automatic renewal term” Dr Schaper said.
“This is an important case, because it makes it clear that businesses like The Community Network must comply with the Australian Consumer Law in their dealings with small businesses. The ACCC will continue to take appropriate enforcement action to protect small businesses,” Dr Schaper said.
“The ACCC would like to acknowledge the State and Federal Small Business Commissioners, which assisted the ACCC in identifying the impact of this conduct on small businesses.” Dr Schaper said.
The ACCC also accepted a court enforceable undertaking from The Community Network to resolve the ACCC’s concerns about the standard form contract used by The Community Network, which included an automatic renewal term. The ACCC was concerned this term had the potential to be misleading or deceptive to prospective advertisers.
“The Community Network has undertaken to amend its standard form contract and change certain aspects of its practices to address the ACCC’s concerns. The amendments include a reduction of the notice period required to terminate the contract,” Dr Schaper said.
Following the commencement of the proceedings, The Community Network provided refunds to the small businesses named in the proceedings.
The Community Network cooperated with the ACCC in resolving these proceedings, and consented to orders which included declarations, the implementation of an ACL compliance program and a contribution to the ACCC’s costs.
The undertaking is available on the Undertakings register: Multimedia International Services Pty Ltd
On 30 November 2015, the ACCC instituted proceedings in the Federal Court against Multimedia International Services Pty Ltd trading as The Community Network for allegedly engaging in unconscionable conduct, misleading or deceptive conduct, making false or misleading representations and wrongly accepting payments from small businesses.
Guidance for small businesses
The ACCC separately notes the introduction of a new law which comes into effect from 12 November 2016 that offers small businesses protections against unfair contract terms offered by other firms.
Guidance for small businesses as to the application of this new law can be found on the ACCC’s website.
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