An Australian Competition and Consumer Commission investigation into advertising claims made in Townsville in July this year has resulted in Ray White (Real Estate) Pty Ltd providing a court-enforceable undertaking.
"During a promotion in July this year, Ray White Investor Services, a business at the time operated by Ray White Real Estate, placed a newspaper advertisement in Townsville under the theme of beating the Goods and Services Tax," ACCC Chairman, Professor Allan Fels, said today. "The advertisement made representations to the effect that it was widely believed that the prices of new homes and land were set to increase by up to 15% as a result of the imposition of the GST.
"But the ACCC and many others are of the view that the 10 per cent tax, together with reductions in Wholesale Sales Tax, will result in increases in the price of new homes and land by less than 10 per cent".
The ACCC believed the representations made by Ray White Real Estate were likely to mislead consumers about the true effect of the GST and the New Tax System changes. The ACCC was concerned that in making the representations, Ray White Real Estate may have breached the fair trading provisions of the Trade Practices Act 1974.
Ray White Real Estate agrees that the prices of new homes and land are unlikely to increase by more than 10 per cent as a result of the introduction of the GST. Ray White Real Estate also admits that its advertising may have been misleading in breach of the Act.
In order to fix the problem, Ray White Real Estate has provided comprehensive court enforceable undertakings to the ACCC. The undertakings provide that Ray White Real Estate will:
- take steps to ensure that it doesn't make the representations of concern in the future without reasonable grounds;
- publish a corrective advertisement apologising for their representations; and
- implement a trade practices compliance program to ensure advertising won't mislead consumers in the future.
"This investigation demonstrates the ACCC's position with respect to representations about the effect of the GST. All businesses should be certain about the advertising claims they make and have the facts to back it up. The ACCC will be vigilant in the transition from the old to the new tax system to make sure consumers are being given the right information by businesses and not being misled.
"The matter also shows that the ACCC will be making sure that consumers aren't misled about the GST whether they are in a major city, Townsville or any other location throughout Australia.
"The ACCC has however welcomed the undertakings provided by Ray White Real Estate as an effective and positive way to resolve matters. The ACCC encourages all businesses to make sure that where a problem is identified, steps to fix the problem, such as those taken by Ray White Real Estate, are followed in a timely manner".
More information about the ACCC's role in GST representations can be found in the ACCC publication Pricing Claims and the New Tax System or on the ACCC's website www.accc.gov.au.
Ray White Real Estate has advised that the business of Ray White Investor Services no longer operates.