The Federal Court in Sydney has ordered Adepto Publications Pty Ltd (Adepto), its sole owner and director, Craig Mitchell, and a former manager, Danielle McKay, to pay penalties totalling $750,000 after they admitted that they had made false and misleading representations in relation to advertising services that were never requested.
The penalties follow enforcement action by the Australian Competition and Consumer Commission.
The Court imposed penalties of:
- Adepto Publications Pty Ltd $500,000
- Craig Francis Mitchell $150,000
- Danielle Melissa McKay $100,000
Justice Cowdroy found that the conduct took place over several years and would probably have continued but for the intervention of the ACCC. The conduct was not only “misleading and deceptive” but “blatantly and knowingly deceitful” and Mr Mitchell and Ms McKay “carried on the scam for their personal gain”.
“The ACCC will act vigorously to protect fair trading in business to business transactions and protect small businesses from unscrupulous traders who prey upon their desire to contribute to charitable activities,” ACCC Chairman Rod Sims said.
“The ACCC gives enforcement priority to conduct resulting in substantial small business detriment. In ordering these penalties, the Court recognised the 312 complaints to the ACCC and the substantial number of small business proprietors who incurred loss or damage from the conduct,” Mr Sims said.
Representatives of Adepto made unsolicited phone calls to Australian businesses about advertising in one of its publications, including:
- The National Emergency Relief Guide
- The Underprivileged Childrens Guide
- The Volunteer Organisations Guide.
After the call, even if the business did not agree to take out an advertisement, Adepto posted a copy of the advertisement as published in the publication and an invoice seeking payment. If the business did not pay the amount demanded in the invoice, representatives of Adepto made follow-up phone calls to the business demanding payment for the unwanted and unordered advertisement.
Adepto admitted that Adepto and its publications had no affiliation with any charitable or non-profit organisations.
Adepto also admitted that while they represented that 2000 copies of the publications carrying the businesses’ advertisements would be distributed to various organisations in the same postcode as the advertiser, actual distribution was significantly less being, at most, limited to 2000 copies nationwide.
The Court made declarations, ordered costs and imposed injunctions by consent upon all of the respondents, restraining them from being involved in similar conduct.
A specific injunction was also imposed by consent upon the respondents, restricting them from:
- requesting payment for advertisements in its publications unless it has written confirmation that the consumer wants an advertisement published, and
- from pursuing payment from businesses who have previously been sent an invoice in connection with the publication of an advertisement in its publications.