The Hospitals Contribution Fund of Australia Ltd will drop waiting periods for 1,207 new members, effectively giving them instant cover, following court-enforceable undertakings* given to the Australian Competition and Consumer Commission.
The undertakings follow action taken by the ACCC about one of the fund's television advertisements.
The advertisement showed a statement: "Join HCF before June 30th and receive instant cover" in bold large print. It also included an audio statement that the two-month and six-month waiting periods were waived, and a visual statement in the fine print that "the waiver does not apply to waiting periods of more than six months, including those for pregnancy and related conditions. Pre-existing ailments and conditions are also excluded".
The ACCC was concerned that the advertisement may have misled or deceived, or been likely to mislead or deceive, the public about the benefits, conditions and characteristics of HCF cover. The ACCC believes the advertisement represented that by joining HCF before 30 June 2001, the public would be entitled to receive benefits from HCF from the time of joining for all hospital, medical and ancillary services included in the cover.
The ACCC considers the potential to mislead arose from the fine print statement being insufficient to dispel the misleading impression given by the words "instant cover" as it was not on the screen long enough to be read.
HCF acknowledged the ACCC concerns and offered court-enforceable undertakings. HCF will waive all remaining waiting periods applicable to all members who joined HCF between 3 and 30 June 2001, including those for pregnancy and related conditions, and pre-existing ailments and conditions. HCF will adjust members' records automatically. Members need not do anything.
"Advertisements that use fine print to qualify the main message are the subject of a continuing crackdown by the ACCC", ACCC Chairman, Professor Allan Fels, said today. "The ACCC recently obtained court orders against Target for fine print in television advertising.
"There are major consumer issues in health sector advertising and the ACCC will continue to be vigilant in pursuing misleading ads.
"Already in the health fund sector, the ACCC is continuing court action against Medibank Private and MBF on similar issues".
Professor Fels welcomed the prompt resolution of the ACCC's concerns and the provision of remedies by HCF to provide effective redress to consumers.
"Orders or undertakings requiring a company to live up to and deliver on the promises made through representations can provide the most effective redress to consumers who have been victims of a misleading representation".
The ACCC acknowledges that HCF has been co-operative in quickly resolving this matter by stopping the broadcast of the advertisement and devising a solution that provides real redress to consumers.