The Federal Court has ordered by consent that P & N Pty Ltd and P & N NSW Pty Ltd (trading as Euro Solar) and Worldwide Energy and 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. This followed action by the Australian Competition and Consumer Commission.
The sole Director of P&N and WEMA, Mr Nikunjkumar Patel, was also ordered to pay a penalty of $20,000 for his involvement in the conduct.
Today 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.
“This is the ACCC’s first litigated outcome in relation to the specific prohibition against fake testimonials under the Australian Consumer Law,” Mr Sims said.
“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.”
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 and were brought to the ACCC’s attention by competing businesses.
“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,” ACCC Chairman Rod Sims said.
“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.”
In his judgment, Justice Besanko found that the companies and Mr Patel engaged in careless and reckless conduct and knew that the representations made were both false and misleading.
His Honour also found that it was “suggested in some of the advertisements that not only were the solar panels made in Australia but that customers or potential customers ought to be supporting them because of that fact” and that these representations “were a central part of the respondents’ business and marketing strategy”.
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.