High Court hands victory to Google in web giant’s battle with ACCC

by Marketing ON 7 February 2013

After to-ing and fro-ing since 2007 over responsibility for misleading or deceptive advertising on Google sites in Australia, the web giant looks to have won its battle against the Australian Competition and Consumer Commission (ACCC) in a unanimous decision by the High Court.

The High Court yesterday unanimously upheld Google Inc’s appeal to a judgment of the Full Federal Court back in April 2012 which found that Google had contravened the Trade Practices Act 1974 by allowing advertisements to appear on its sites that engaged in misleading or deceptive conduct, and it puts an end to the five-year-long battle.

As a result of the decision, the ACCC will now ponder the High Court’s judgement to better understand whether it has broader ramifications and will consider any consequences for enforcement of Australian Consumer Law, says chairman Rod Sims.

“The ACCC took these proceedings to clarify the law relating to advertising practices in the internet age,” he says. “Specifically, we considered that providers of online content should be accountable for misleading or deceptive conduct when they have significant control over what is delivered.”

Sims is of the knowledge that the High Court only analysed one key element when upholding the appeal, and believes more angles need to be addressed in order to avoid future grey areas. “The High Court’s decision focused only on Google’s conduct,” says Sims, alluding to the fact that the accountability of the organisation was not put under the spotlight.

Looking back, it appears as though the High Court has mirrored part of the the sentiment of the Federal Court by stating that Google was “merely communicating” the representations (advertisement) without adopting or endorsing any of them.

As a way to defend itself from the charges back in 2007, Google has since released a Business Names Policy which prohibits advertisers’ use of unrelated registered business names in the first line of ad text, when they are using that registered business name to imply affiliation, partnership or any special relationship with any unrelated third party.

This policy was initially applied by Google in Australia and New Zealand but was later expanded, and welcomed by the ACCC, to apply to all countries in mid-July 2010, and by November Google made adjustments to the terminology it used surrounding advertising descriptions, changing the terminology on its search results pages from ‘Sponsored links’ to simply ‘Ads’.

ACCC tries branded content to get message across

by Marketing ON 3 October 2012

The ACCC has thrown its hat in the branded content ring, releasing a short film to educate people about illegal business cartels.

Produced by Melbourne-based production company, Burning House, the 16-minute film entitled ‘The Marker’ tells the story of new employee Martin Tully who finds himself in a workplace engaging in cartel behaviour. As the story line plays out, Martin is forced to decide if he will cheat with his competitors or come clean.

The ACCC elected to go with the branded content approach to push the boundaries of their corporate communications style, and felt a film would be the perfect vehicle for engaging their target market with the cartel message, according to Burning House.

In a statement the production company said it is a firm believer that the future of branded content lies in the power of interesting and compelling storytelling.

The film ends by showing the consequences for the ring leaders of the cartel business which include civil and criminal sanctions and up to 10 years in jail. Cartel behaviour includes any cooperation between businesses to fix prices, share markets, rig bids or restrict supply/outputs.

The production qualities of the film are excellent, but will the story line keep an audience all the way through? Let us know your thoughts on the ACCC’s foray into branded content below.

ACMA: New code to crack down on telco ads, save billions in ‘bill shock’

by Marketing ON 12 July 2012

Buzzwords used by telcos such as ‘unlimited’ and ‘capped’ plans which are often misunderstood by consumers will be cracked down on in a new mandatory code introduced to protect consumers.

The Telecommunications Consumer Protection Code, set to come into effect in September, will force telcos to be literal with the words used in their advertising, along with complying to a range of other regulations aimed at protecting consumers from issues such as ‘bill shock’, confusing mobile plans and poor complaints handling.

The code is being introduced following the Reconnecting the Customer public inquiry conducted by the Australian Communications and Media Authority (ACMA) which estimated annual costs of $1.5 billion associated with consumers choosing the wrong plan, $108 million for the costs of telephone complaints and $113 million for the costs of writing off bad debts.

ACMA Chairman, Chris Chapman says the new code should give rise to a much needed, much improved, customer experience. “The code is a unique and ground-breaking document by world standards, bringing together best practice protections at all of the touch points in the telco customer lifecycle,” he says.

Previously the industry was regulated under a voluntary code. The results of ACMA’s inquiry found that better advertising practices, more effective information for consumers, tools to avoid bill shock, streamlined complaints handling, a customer care reporting framework and changes to the Telecommunications Industry Ombudsman (TIO) scheme were required.

Telcos will have to tell customers when they’re about to breach their ‘caps’, which in the future will be defined as ‘hard caps’ to clarify that if a plan is capped at a certain price the customer will never pay more than that capped amount.

Similarly, the term unlimited will really have to mean unlimited, with shaping and additional charges not part of the fine print.

“The code comes against the background of the rollout of the NBN and is a good example of forward-looking and evidence-based engagement in a converged world,” Chapman adds.

The new code was developed by the Communications Alliance, which formed an independently chaired steering group comprising industry and consumer representatives, the Australian Competition and Consumer Commission, and the Department of Broadband, Communications and the Digital Economy.

Ben Polis in more trouble as Energy Watch guilty of false advertising

by Marketing ON 1 May 2012

Energy rate comparison service Energy Watch has been found to have misled consumers in a 2011 advertising campaign and could face fines in the tens of millions of dollars, while disgraced former CEO Ben Polis was found to have broken the law through his role as voice-over artist in the radio advertisements.

The Australian Competition and Consumer Commission (ACCC) brought the action against Energy Watch and its former CEO with The Federal Court finding that the 2011 campaign misled consumers in relation to the savings that could be achieved by using the price comparison service, in breach of Australian Consumer Law.

Of concern were 80 advertisements in the January to September 2011 campaign that represented that Energy Watch compared the rates of many or all energy providers when in fact it only compared a customer’s existing rates with those of the energy retailers with which Energy Watch has commercial arrangements.

The company also falsely claimed it had saved residential customers $368 and business customers $1878 in the year after switching energy provider through Energy Watch, and that it would do the same for new customers.

“Energy Watch blatantly misled consumers about the service it provides and the savings they could obtain, as Energy Watch was earning commissions from its preferred suppliers for each customer who switched to them using the Energy Watch service,” says ACCC chairman Rod Sims.

The ACCC is seeking declarations, injunctions, corrective advertising, costs and civil penalties, the latter of which can be up to $1.1 million for corporations and $220,000 for individuals for each breach.

The individual actions against former CEO Ben Polis add to his growing woes after his expulsion from the company’s leadership and ownership amid a storm of bad publicity last month for race-related comments that saw the company dropped as a sponsor by the AFL’s Melbourne Football Club.

Apple to refund and advertise corrections over iPad 4G row

by Marketing ON 29 March 2012

Apple will display signage on its website and in store saying that the new iPad is unable to connect to Australia’s 4G long-term evolution (LTE) network, in addition to offering refunds for the buyers of the new model.

The tech giant agreed to the actions after a Federal Court hearing initiated when the Australian Competition and Consumer Commission (ACCC), filed an urgent application alleging that the promotion of the new iPad as being 4G capable was misleading.

The new iPad comes with the capability to connect to LTE or 4G networks in the 700MHz or 2100MHz spectrum band. Australia’s only LTE network is currently provided by Telstra, which uses its former 2G spectrum band of 1800MHz.

As part of the agreement the technology giant will display the statement, “This product supports very fast cellular networks. It is not compatible with current Australian 4G LTE networks and WiMAX Networks” in its promotional materials, on its website and online store, and at the point of sale.

The company will also email any anyone who purchased the new iPad between 16 March and 28 March offering the option to return the product for a refund.

In the hearing yesterday, Apple’s legal counsel, Paul Anastassiou, said the company doubted many buyers would request a refund.

Apple has undertaken to carry out the actions as soon as reasonably practicable and
by no later than 5 April 2012.

Optus capped $3.61m for advertising breaches

by Marketing ON 9 March 2012

Optus was today ordered to pay $3.61 million in penalties in relation to the advertising of broadband internet plan.

Court action brought about by the Australian Competition and Consumer Commission (ACCC) was in relation to the telco’s ‘Think bigger’ and ‘Supersonic’ broadband internet plans.

The plans were advertised via TV, print, OOH and direct marketing, but, according to the ACCC, failed to disclose the speed limiting that would take place at all times once a customer had exceeded their peak data allowance, even during off-peak times.

In handing down its ruling, the Federal Court found that, “Optus cannot be regarded as a first offender. It failed to observe the requirements of the [Competition and Consumer] Act, and not for the first time”, and that, “this court should proceed on the footing that Optus’ conduct was very serious. The contraventions were on a grand scale. They were also unexplained.”

With no explanation for the breaches, ACCC chairman Rod Sims says the penalty is necessary to deter businesses from employing misleading conduct as a genuine business strategy.

The penalties were reduced from $5.26 million after an appeal by the telco, which posted revenue figures of $2.42 billion for the quarter ending 31 December 2011, a year-on-year increase of 2%.

ACCC has your heart in mind, tackles romantic scammers

by Marketing ON 14 February 2012

In a well-timed announcement this Valentine’s Day, the Australian Competition and Consumer Commission (ACCC) has thrown its support behind online dating and romance services in their fight against scammers.

Scams involving dating and romance cost Aussies more than $21 million last year, with 2100 individuals reporting scams, and although individual websites have taken steps to tackle the problem the ACCC is stepping in to help after revealing the average victim’s loss was over $20,000. This, of course, excludes cases left unreported.

“Online dating is an increasingly common way for people to meet each other. However, the growing number of scammers undermining public trust in legitimate businesses like dating and romance websites is an area of concern to the ACCC,” says ACCC deputy chairman, Dr Michael Schaper.

“These scams often see a genuine user of a dating website being contacted by a potential admirer who is a scammer in disguise. After forming a relationship with the victim, the scammer plays on emotional triggers to get the victim to provide money, gifts or personal details.”

The guidelines for legitimate dating sites (available here) include the general areas of appropriate scam warnings and information, internal verification procedures to detect scammers, and effective handling of complaints.

Marketing would like to wish all our readers a happy Valentine’s Day, and if you are going to ‘participate’ in ‘romantic’ ‘activities’ (such as online dating) please stay safe.

Homepage image courtesy of Wendesday Elf Mountainside Crochet via Flickr, used under CC BY 2.0.

ACCC launches consumer rights awareness campaign

by Marketing ON 6 February 2012

The Australian Competition and Consumer Commission (ACCC) kicks off a consumer rights media campaign today aimed at correcting widespread confusion among consumers about what to do when a product or service they buy turns out to be not quite right.

90% of consumers are confused about what to do with a faulty or incorrectly-advertised purchase, says the ACCC, and the campaign is a direct response to these figures found in the ‘Australian Consumer Survey 2011′.

Australia-wide ‘Consumer Guarantees’ lie within Australian Consumer Law, and apply to products and services whether they be online, in store, second-hand, or on sale. “We now have a single national law so that no matter where you shop in Australia you have the same rights to a repair, replacement or refund for a faulty product or unsatisfactory service,” says ACCC chair, Rod Sims.

“If products don’t work as promised or don’t work at all you have rights as a consumer regardless of whether you bought it online, in a shop, full-price or on sale.”

On the other side of the counter, almost a quarter (24%) of businesses have no understanding of their post-purchase obligations, and only 13% are aware they must honour guarantees and warranties.

The media campaign launched today, ‘Repair, replace, refund’, will include radio and online advertising directing consumers and businesses to australia.gov.au/consumerrights to find out more information about their rights and obligations, and to advise when a repair, replacement or refund is appropriate.

An ACCC spokesperson tells Marketing this is its first radio campaign the ACCC has run for quite some time, and the first time radio has been coupled with online.

As well as running on mainstream metro and regional radio stations, the radio ads will include specific targeting to people from non-English speaking backgrounds. For example, ads in Cantonese and Greek will run on radio stations in those languages, among others. Additionally, indigenous Australians will be targeted through SBS National.

The web advertising will run on popular online shopping sites such as eBay and Lassoo, as well as price comparison sites.

AirAsia cops flak from ACCC for misleading pricing

by Marketing ON 24 January 2012

The Australian Competition and Consumer Commission (ACCC) is taking legal action against AirAsia for displaying misleading prices on its website, www.airasia.com/au.

The consumer watchdog alleges some airfare prices listed on the Malaysian-based discount airline’s website were not inclusive of all fees, taxes and other mandatory charges, in breach of Australian advertising regulations.

Businesses that choose to advertise part of a price of a product must also prominently display a single total price.

The ACCC has filed the case in the Federal Court’s fast track list and is seeking penalties and court costs as well as corrective notices and guarantees from AirAsia.

Ugg boot on other foot after fine

by Marketing ON 27 June 2011

Online trader Marksun Australia was found guilty by the Federal Court in Perth last week of engaging in false and misleading conduct and has been penalised to the tune of $430,000.

The court action, brought by the Australian Competition and Consumer Commission (ACCC), was in relation to the company’s promotion of ugg boots as being Australian made when in fact they were wholly manufactured in China. Marksun used the registered trademark “Marksun Products Ugg Boots from Australia” and the statement “Made in Australia from Australia Wool” in the marketing of the boots in an attempt at Australia-washing, described in the judgement described as deliberate and dishonest.

Iconic Australian landmarks, symbols and native wildlife were also used misleadingly. The Sydney Opera House and the national flag adorned promotional materials, and images of wombats and kangaroos provided a fuzzy marsupial face to this tragedy.

Of the total fine, $100,000 was for the unauthorised use of the green and gold Australian Made logo, which is controlled by the Australian Made Campaign.

ACCC chairman Graeme Samuel said businesses should be particularly careful when it comes to country of origin claims. “The ACCC considers country of origin claims to be a particularly valuable marketing tool for businesses as many consumers place a premium on goods that are Australian made. This outcome serves as a timely reminder that the ACCC will not hesitate to take action against businesses which mislead consumers about the origin of the goods they are selling,” Samuel warned.

Compared to previous incidents, this latest case was relatively straightforward. In 2008 Creswick Woollen Mills admitted to making false Australian Made claims about its merino wool blankets. The blankets were cut and sewn in Australia, but the spinning and weaving took place in China, contravening the Trade Practices Act 1974 which requires substantial transformation and at least 50 percent of the cost of manufacturing to take place in Australia in order for the Australian Made logo to be used.

ACCC comes down hard on AMI

by Marketing ON 9 June 2011

In a rivalry spanning the last decade (with plenty of ups and downs) the Australian Competition and Consumer Commission (ACCC) yesterday commenced yet more proceedings against the Advanced Medical Institute (AMI) in the Federal Court, this time alleging the company failed to tell existing and potential customers it was insolvent, and that AMI accepted advance payment for services despite a risk it will not be able to provide promised premature ejaculation and erectile dysfunction treatments.

The erection protection clinic was placed into administration in December, one day after the ACCC filed proceedings against it for alleged engagement in 'unconscionable conduct' towards consumers. That case is still ongoing, and claimed that AMI's doctors conducted consultations with patients, "in a manner which did not provide an appropriate diagnosis and medical treatment of male sexual dysfunction," and additionally that AMI staff told patients they were entitled to a refund should the treatment not work but didn't disclose the conditions of eligibility for said refund.

Yesterday's filing is the latest case in an expanding history of court actions involving the two parties dating back to April 2002, when the national watchdog pulled up the impotence treatment provider for "false, misleading and deceptive conduct in relation to the advertising and promotion of treatments for erectile dysfunction and premature ejaculation." A later case dragged television celebrity Ian Turpie into the tussle after he was used in a national newspaper campaign claiming that AMI's treatments had cured his little problem, when in fact they hadn't. Whether that means he never had the condition, or he was (or even is) still suffering from it was not known at the time of writing this article.

The ACCC is seeking injunctions that would require AMI to disclose its administration status, let customers know how this could affect their contracts and prevent the company from accepting any more payments for goods and services. At the time of writing the AMI website was still online and accepting bookings for consultations.

UPDATE 10/6: The ACCC announced today that it had obtained interim orders requiring the Advanced Medical Institute to inform clients of its insolvency. Prominent notices should be appearing on its website, and letters will be sent out over the next two weeks.

Vodafone challenging Telstra for customer angst

by Marketing ON 16 December 2010

Earlier this month, Marketing magazine reported the results of a Roy Morgan survey that showed Vodafone was falling down the list of mobile service providers for customer satisfaction. The next survey is unlikely to bring better results for the embattled telco, with many consumers recently threatening to leave their contracts.

“Tens of thousands of angry Vodafone customers are free to walk out on their contracts, according to the nations top telco consumer advocate,” News.com.au reported yesterday.

“Many of Vodafones seven million mobile customers have for two months been enduring problems, including call failures and slow data speed,” continues the article.

The article went on to imply that the ACCC supported in principal Vodafone users’ right to cancel their contract, but today the ACCC came out and cleared up their position.

…contrary to some media reports, the ACCC does not advise consumers that they are entitled to walk away from their contracts as a means of addressing their concerns, ACCC chairman Graeme Samuel said.

“Consumers experiencing difficulties with their services should first contact their service provider to try and resolve the issue,” read the ACCC release. “If that doesn’t work, they should contact the Telecommunications Industry Ombudsman.”

An ACCC blessing to leave a contract is just about as bad as it gets for a telco, but even if that doesn’t eventuate, the media attention has been horrific for Vodafone. The news.com.au article has so far been ‘recommended’ by 354 people on Facebook.

However, Vodafone still has quite a way to fall before it starts competing with Telstra for the wooden spoon. It would have to fall 12% in customer satisfaction on the next Roy Morgan survey and significantly increase its number of negative Facebook user groups. In a slightly comprehensive Marketing magazine study, Telstra was found to have 47 groups with ‘Telstra sucks’ or ‘Telstra sux’ in the title, with the global Vodafone ‘sucks’ and ‘sux’ groups amounting to a measly 11.

Update: In the latest Roy Morgan mobile provider customer satisfaction survey released today, Vodafone has fallen a further 2% to 70% customer satisfaction, falling behind Optus and still trailing Virgin Mobile and 3 Mobile.