In Australian Competition and Consumer Commission v P&N Pty Ltd [2014] FCA 6 the Federal Court ordered by consent that P & N Pty Ltd and P&N NSW Pty Ltd (trading as Euro Solar) and Worldwide Energy & Manufacturing Pty Ltd (WEMA, formerly trading as Australian Solar Panel) pay combined penalties of $125,000, for publishing fake testimonials and making false or misleading representations about the country of origin of the solar panels they supply. The sole Director of P&N and WEMA, Nikunjkumar Patel, was ordered to pay a penalty of $20,000 for his involvement in the conduct.
The Court found that video testimonials published on YouTube by P&N and P&N NSW and written testimonials published by WEMA on its website were not made by genuine customers of the companies. The Court also found that P&N, P&N NSW and WEMA made false or misleading representations to consumers that they manufactured or supplied solar panels that were made in Australia - when they were in fact made in China.
The misleading representations were made online, in newspapers and on television between November 2012 and September 2013, being brought to the ACCC’s attention by competing businesses.
The ACCC Chair commented that
Consumers should be able to trust that testimonials give honest feedback about a consumer’s experiences with a service or product. If they are not genuine, consumers may be enticed into making a purchase that they would not have otherwise made. ...
Credence claims such as country of origin can be a powerful marketing tool for businesses, with consumers often prepared to pay a premium for products made in Australia. Businesses making misleading representations can harm consumers by influencing them to purchase products, sometimes at a premium price, they otherwise wouldn’t choose to. They can also harm competitors who accurately represent their products by creating an unfair playing field.Besanko J found that the companies and Patel engaged in careless and reckless conduct and knew that the representations made were both false and misleading.
In addition to penalties, the Court also made other orders by consent including declarations, injunctions, corrective advertising and a contribution towards the ACCC’s costs.
