As new businesses develop and technology advances some principles still remain the same.
Recently a digital advertising agency was prosecuted by the Australian Competition and Consumer Commission in relation to the supply or possible supply of its advertising services. The advertising was to be done by way of digital displays at various shopping centres.
In May this year, Multimedia International Services Pty Ltd was fined $230,000 for conduct considered by the Federal Court to be unconscionable. In that case representatives of Multimedia had:
- entered into a contract and a direct debit authority with a customer on the basis that certain advertising would be shown on a digital display board at a newsagency in Westfield Hornsby;
- failed to draw the customers attention to terms precluding cancellation of the contract;
- debiting over $1,000 from the bank account while not providing any services at all; and
- continuing to accumulate debts and using debt collectors threatening action and adverse credit ratings to seek to collect an additional $4000.
No service had ever been provided, and indeed it was not able to be provided for at least seven months after the promised start date because the digital screen had not been installed.
Another of their customers was promised advertising at another centre. When the centre confirmed that it would not be hosting such advertising screens, the customer was advised that they would not able to get out of the contract and money was taken from the credit card for the subsequent three months on the basis of multimedia had unilaterally decided to display the advertisement at an inferior site.
Conduct of employees
When these matters were drawn to the attention of senior Multimedia management steps were undertaken to deal with the conduct of the relevant sales representative and complaints officers. Substantial steps had already been taken by Multimedia in relation to trade practices and consumer training, and after the matter drawn to their attention further programs were put in place to prevent this type of conduct by its sales agents and complaints handlers. They cooperated materially in relation to the investigation.
Having basically conceded their improper conduct, the principal issue of concern was the level of penalty to be applied. Notwithstanding their cooperation, the ACCC sought penalties of $355,000. Multimedia asserted that $85,000 was more appropriate. In light of all matters the appropriate penalty was declared to be $230,000.
The case is a reminder for all businesses to monitor their employees and ensure that there is ongoing training in relation to competition and consumer law. In this case the company’s existing training efforts, and their response to the claim, made a material difference to the penalty ordered.