From the recent 'Companies Behaving Badly'
speech by ACCC chair Rod Sims
... in reviewing our enforcement activity in April, in just one month alone we saw the following.
Ford was ordered to pay $10 million in penalties after it admitted that it had engaged in unconscionable conduct in the way it dealt with complaints about PowerShift transmission cars, sometimes telling customers that shuddering was the result of the customer’s driving style despite knowing the problems with these cars.
Telstra was ordered to pay penalties of $10 million in relation to its third-party billing service known as ‘Premium Direct Billing’ under which it exposed thousands of its own mobile phone customers to unauthorised charges.
Thermomix paid penalties of over $4.5 million for making false or misleading representations to certain consumers through its silence about a safety issue affecting one of its products which the company knew about from a point in time.
Flight Centre was ordered to pay $12.5 million in penalties for attempting to induce three international airlines to enter into price fixing agreements
a second Japanese shipping company, K-Line, pleaded guilty to criminal cartel conduct concerning the international shipping of cars, trucks and buses to Australia
proceedings against Woolworths were instituted alleging that the environmental representations made about some of its home brand picnic products were false, misleading and deceptive.
And unfortunately, this is just the tip of the iceberg.
Earlier this year, the Federal Court found that the food manufacturer Heinz had made misleading claims that its Little Kids Shredz products were beneficial for young children, when they contained approximately two-thirds sugar.
Who could forget the infamous marketing of Reckitt Benckiser who made misleading representations on the packaging of each of its four Nurofen Specific Pain products? They represented that each was specifically formulated to treat a particular type of pain when in fact each product contained the same active ingredient and was no more effective at treating the type of pain than any of the other Nurofen Specific Pain products. The key difference was that the specific pain products were near double the price of the standard Nurofen product.
Hotel giant Meriton was caught out recently taking deliberate steps to prevent guests it suspected would give an unfavourable review from receiving TripAdvisor’s ‘Review Express’ prompt email, including by inserting additional letters into guests’ email addresses so that their email addresses would not be correct. The Court found this to be a deliberate strategy by Meriton to minimise the number of negative reviews Meriton’s guests posted on TripAdvisor.
Recently Optus Internet admitted it made misleading representations to around 14,000 customers about their transition to the NBN, including stating that their services would be disconnected (in as little as 30 days in some cases) if they did not move to the NBN when under its contracts they could not force disconnection within the timeframe claimed.
Pental also recently admitted that it made misleading representations about its White King ‘flushable’ cleaning wipes saying that they would disintegrate in the sewerage system when flushed, just like toilet paper, when Australian wastewater authorities face significant problems because they can cause blockages in sewerage systems. We have a similar case against Kimberly-Clarke still being contested before the Court.
We have seen more bad behaviour in the education sector in recent years than you would hope to see in a lifetime. In one case, Acquire Learning and Careers was ordered to pay penalties of $4.5 million for its tactics in pressuring consumers to enrol in vocational training. The Court found its model was based on maximising the number of enrolments it was able to achieve for its clients and thereby maximising the fees payable to it. The judge said its activities resembled those of an unscrupulous ‘fly-by-night operation’ rather than those of a prominent and market leading provider of student recruitment services, as it described itself.
A few years ago the companies behind Bet365 paid penalties of $2.75 million for its ‘free bets’ offer in which it failed to make clear that in order to receive the represented $200 free bet offer, new customers were required to deposit and then gamble $200 of their own money first.
And too many large companies continue to mislead consumers about their fundamental consumer guarantees which provide for refunds, replacement or repair when a good is faulty.
For example, following the so-called ‘error 53’ which disabled some iPhones and iPads, Apple Inc admitted it misrepresented to a number of Australian customers that they were no longer eligible for a remedy if their device had been repaired by a third party, often with a low cost screen replacement. Apple Inc was ordered to pay $9 million in penalties.
At the end of last year, the Full Federal Court upheld the finding against Valve, one of the world’s largest online video game retailers, that it had made misleading representations about consumer guarantees.
And it is not just consumers who are subjected to bad behaviour from big companies.
