ACCC enforcement update - High price to pay for high pressure sales tactics

On 19 March 2018, the Federal Court imposed a $300,000 penalty against online business directory service ABG Pages Pty Ltd for engaging in systemic unconscionable conduct, undue harassment, and making false and misleading representations in relation to its online advertising services.  The sole director of ABG Pages, Ms Michelle McCullough was ordered to pay a penalty of $40,000 and was disqualified from managing corporations for 5 years.

The ACCC instituted proceedings against ABG Pages in December 2016 alleging a raft of breaches of the Australian Consumer Law, including:

• falsely representing that large businesses purchased its directory services;
• using high pressure sales tactics to sell listings on its online business directory;
• misleading businesses into entering one or more contracts;
• refusing to cancel contracts which customers did not want;
• misleading businesses about the total duration and the total price of contracts;
• misleading businesses into entering into second or subsequent contracts for additional listings; and
• unduly harassing customers by repeatedly contacting them for payments.

Of particular note were the high pressure sales tactics used by ABG Pages to sell listings on its online business directory.  Such conduct included chasing debts that did not exist, with one customer called 993 times by ABG Pages over a nine-month period.

ABG Pages and Ms McCullough admitted to various breaches of the Australian Consumer Law and the ACCC action resulted in the closure of the ABG Pages business in 2016.  The Federal Court also ordered ABG Pages and Ms McCullough to jointly make a $25,000 contribution towards the ACCC’s costs and that Ms McCullough attend an ACL compliance program.

In successfully bringing proceedings against ABG Pages, the ACCC has sent a clear message that making false or misleading representations, engaging in high pressure sales tactics and unduly harassing customers to enter into contracts or pay invoices, are not legitimate business strategies.

It should also be noted from this case that the potential penalties under the Australian Consumer Law for engaging in such conduct are significant.

Click here for a link to the ACCC media release on the proceedings against ABG Pages and Ms McCullough.

For general Australian Consumer Law compliance advice, please contact:

Craig Sanford, Director, Sierra Legal on M: +61 (0)416 052 115 or E: csanford@sierralegal.com.au

Mike Jeffery, Director, Sierra Legal on M: +61 (0)402 745 054 or E: mjeffery@sierralegal.com.au

Kenneth Gitahi, Senior Associate, Sierra Legal on M: +61 (0)401 450 220 or E: kgitahi@sierralegal.com.au