Following admissions by Gold Coast businessman, Robert James Price, the Federal Court in Brisbane has found that he misled consumers and, in one instance, acted unconscionably in connection with the marketing and sale of horse race betting software in Australia and New Zealand.
The Australian Competition and Consumer Commission alleged the software, which was marketed under names such as “Autotab”, “Offtrack” and “Solutions Software” by companies that metamorphosed at regular intervals, falsely claimed to be able to predict horse-race place-getters with high accuracy. Purchasers paid up to $12,500 for a copy of the program, having been told they could use it to earn up to $8,000 per month and realise the lifestyle of their dreams.
The companies included Solutions Software International Pty Ltd and the companies formerly known as Acepark Pty Ltd and Offtrack Investments Pty Ltd. Although not all of the companies were parties to the proceedings, the Court found that Mr Price was knowingly concerned in contraventions of the Trade Practices Act 1974 by five companies.
The ACCC alleged the program claimed to follow and analyse the fluctuations of dividends paid and track money bet on horse races. It allegedly highlighted 'smart money' (money placed by professional punters at the last minute) and recommended runners to be backed.
With increasing globalisation and conduct occurring internationally, the ACCC relied on assistance from the New Zealand Commerce Commission to achieve an effective outcome for both Australian and New Zealand consumers.
The Court’s findings included that, contrary to what purchasers were told, the program was a gambling program (and not an investment program), did not have a strike rate of success of between 70 and 95 per cent, and there were no reasonable grounds for representing that purchasers could expect to earn income or profit using the program.
In late 2001 the ACCC obtained interlocutory injunctions to stop the offending claims being made pending final orders from the Court.
"Widespread marketing of this type of program is necessarily self defeating in that any financial return from using the program is linked through the dividend to the number of people sharing the 'inside information' that the program is supposed to provide", ACCC Chairman, Professor Allan Fels, said today.
"As the number of people sharing this information increases, so too will the number of people making last minute wagers on the one selection, causing any dividend paid to be dramatically reduced from that quoted at the time users decide to place their bet".
The ACCC had the program tested and, based on those tests, believes that punters would achieve a similar success rate for a place bet if they were to simply follow the TAB Win Favourite or Tip.
The Court also found that Acepark Pty Ltd, through Mr Price himself, acted unconscionably by requiring one consumer to sign a waiver as a condition of being refunded the amount paid for the program, following a court-enforceable undertaking given to the ACCC in 1999*. The waiver purported to make the payment a full and final settlement, whereas the undertaking required the company to also compensate the consumer for amounts lost while attempting to operate the program. Mr Price was fully aware of the consumer’s situation in that she had limited money and had bought the program so she could work at home while caring for her terminally ill partner.
The Court ordered, by consent, that Mr Price and two of his former colleagues, Ronald James Curtin and William Greig Millar, be permanently restrained from being in any way involved in representing, in connection with the marketing and sale of the program, or any substantially similar program, that:
- the program and/or the company marketing the program has sponsorship, approval or affiliation with any TAB services throughout Australia
- that purchasers can reasonably expect to earn certain amounts of income and profit by operating the program
- the program has an average strike rate or success rate ratio of 70 to 95 percent in respect of selecting successful place bets
- it is necessary that potential purchasers purchase the program urgently, to avoid imminent price increases
- the program is an investment program, not a gambling or punting system and involves minimal risk
- the number of people who purchase the program will not render the program less effective.
The Court also made declarations, findings of fact and granted permanent injunctions against Solutions Software International Pty Ltd and the companies formerly known as Acepark Pty Ltd and Offtrack Investments Pty Ltd.
Mr Price was ordered to publish prominent corrective advertisements in Australian and New Zealand newspapers. He and Mr Curtin were also ordered to make financial payments to the ACCC, which the ACCC expects will provide for partial refunds to purchasers named in the proceedings. Mr Millar undertook to perform community service work with a gambling assistance charity on the Gold Coast in lieu of any financial contribution. Mr Curtin and Mr Millar were both ordered to attend trade practices compliance training.
"There exist a number of operators promoting such gambling schemes who will potentially be affected by this decision. These operators need to be aware that if they adopt similar business practices they run the real risk of breaching the Act and ACCC action", Professor Fels said.
"With spring upon us and racing fever in the air, consumers, too, should carefully consider all claims made by such operators and to think 'long and hard' before parting with their hard earned money – chances are they may never see it again".