The Australian Competition and Consumer Commission has issued a draft notice proposing to revoke a notification lodged by Edosh Pty Ltd through which it intends to offer rebate and referral commissions to customers who join its website and buy goods or services through the site, or refer others to buy through the site.
Members would receive referral commissions on purchases made by other members who they have referred, up to the fifth level of referral. eDosh would also keep a percentage of the rebate and referral commissions.
The eDosh scheme differs from other multi level marketing and discount schemes because eDosh is offering services on the condition that customers acquire products from third parties and eDosh has lodged a notification seeking immunity for this conduct from the ACCC on public interest grounds.
"The ACCC considers that eDosh's promotion of its multi-level marketing scheme is likely to entice consumers to become members and recruit others in the expectation that they will earn large amounts of money through referral commissions when in reality, it is likely that members will not," ACCC chairman, Graeme Samuel, said today.
"The ACCC is concerned that the conduct does not make the real cost of participation clear to consumers from the outset. Although the annual membership fee is relatively small, customers are also required to commit to ongoing contracts or spend hundreds of dollars a month to be eligible for the referral commissions."
eDosh has agreed not to commence marketing its scheme until the ACCC has finalised its assessment.
eDosh and any other parties that may be interested in the issues raised in this draft notice now have the opportunity to provide further information to the ACCC to assist its consideration of whether to issue a final notice revoking this notification.
More information regarding the notification, copies of the draft notice and information on how to make a submission concerning this notification are available from the ACCC's website www.accc.gov.au/ExclusiveDealingRegister or by emailing the Adjudication Branch at adjudication@accc.gov.au.
Businesses may obtain protection in relation to conduct that might be at risk of breaching the exclusive dealing provisions of the Trade Practices Act 1974 by lodging a notification with the ACCC. Once lodged, protection for the notified conduct begins automatically, or in the case of third line forcing, after 14 days.
The ACCC may revoke a third line forcing notification if it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment to the public from the conduct. Before issuing a revocation notice, the ACCC must issue a draft notice setting out its reasons for proposing to revoke the notification.