Legal Proceedings Against Crazy Js

TPG Internet Pty Ltd (or TPG) started a national print media campaign regarding its unlimited ADSL2+ and home phone packages. Along with the print media campaign, it added television, radio and online campaign advertisement. The Australian Competition and Consumer Commission (ACCC) called out to TPG pointing out that the advertisement campaign of the company was deceptive and misleading, and such advertisement is infringing the provisions of Trade Practice Act (TPA) at that time, now changed to Competition and Consumer Act (CCA). This action of ACCC compelled TPG to change the campaign which had run for 13 days. The company changed the advertisement which was spread to the consumers through even bigger platform like newspapers, magazines, radio ads, cinemas, outdoor ads (such as hoardings, billboards, trams and buses) and through the internet (Corones 2014).

The High Court intervened on the second advertisement which allured consumers with an offer of “unlimited ADSL2+$29.99”. This offer had a significant annexure to it which said that the unlimited ADSL2+ service was only available with an additional package of home phone rental for $30. ACCC brought the charges against TPG for alluring consumers by false message which is likely to deceive the consumers. The consumers were in the impression that they would only be paying $29.99 dollar for the unlimited ADL2+, while they would actually be liable to pay $29.99 + $30 = $59.99 for the offer per month. This deceptive advertisement of TPG was sufficient to prove the case in favour of the allegations of ACCC (John and Willekes 2014).

First proceeding:

TPG claims to revise its first advertisement, replacing it with the second, which again was held misleading by the ACCC. The Commission disapproved of the second campaign as well and filed for an interlocutory injunction to restrict the company from disseminating the misleading campaign further. However, in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2010] FCA 1478 Ryan J dismissed ACCC’s plea by stating that the commission’s allegation was weak. TPG had made a calculation of monthly package in one of its alternative precautionary advertisement, which later proved of its deceptive actions.

Second proceeding:

On appeal, the suit of Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254 proceeded to the High Court for the final order which was heard by Murphy J. The court held that it needed to compare and analyse the statement of the first campaign with the second one to determine the allegations of ACCC. The court pointed out the breach of section 52, 53(e), 53(g) and 53C of the then Trade Practices Act (now, sections 18, 29(1)(i) and 29(1)(m) of Australian Consumer Law contained in the schedule 2 of Competition and Consumer Act).

Bait Advertising in Crazy Js Case

Murphy J held that:

• TPG had mislead and deceived the consumers by suppressing facts about the advertisement, in both first and second one, as it did not mention that the consumers are supposed to spend $59.99 for the unlimited ADSL2+ and an additional subscription to home phone line rental on monthly basis.
• TPG misled the consumers by not disclosing about the set-up fee that was supposed to be paid for TPG service in the first advertisement.
• TPG violated section 53C of the Trade Practices Act as it purposely skipped to disclose the single price of a product specifically, in the advertisements.

Third proceeding:

Before Murphy J, a separate proceeding for penalty was directed. In this hearing, the court ordered an injunction restricting TPG from using the first and the second advertisement. The company was penalized with a pecuniary compensation of $2 million. The court also directed TPG to run a correct campaign to promote and market its products that does not deceive people (Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629).

• ACCC have strong grounds to allege TPG, starting from the first or initial campaign. They are of the view that TPG’s advertisement was dominantly highlight the message of “unlimited ADSL2+ for $29.22” which was misleading and deceiving as the offer was not just limited to the ADSL2+, but had an additional home phone rental line that costs $30. The ADSL2+ part was in bigger fonts while the additional home phone-line clause was in smaller fonts, which a person would generally ignore to read.
• ACCC added to the argument that a consumer would not have an idea pertaining to the nature of the ADSL2+ service, which the company chose to ignore to mention in the advertisement, yet clubbed the offer along with a ‘bundle’ or package that includes home phone line.
• ACCC argued that a penalty of $50000 was not a sufficient deterrent punishment in terms of refraining companies from giving such misleading and deceiving advertisement, which makes the consumers suffer.

On the decision of Murphy J, TPG appealed (TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190) against such decision. It was again held by the Court that the company had misled consumers by not disclosing the material fact about the advertisement, which has the potentials to economically injure consumers and shake their trust on the company.  TPG defended itself by stating that:

• The campaigns needed to be assessed from the perspective of its context, not from the point of a dominant message only.
• It was common for the targeted consumers pertaining to the campaigns to know that an ADSL2+ connection is always bundled with a phone line connection. Therefore, the express mention of the bundle offer was redundant.
• The penalty of $50000 was excessive, as the company had already incurred an additional cost to contact the consumers for offering them a refund.

• The advertisers are advised regarding the usage of disclaimers in advertisements to highlight headline messages. The court alerted advertisers to assess the dominant message or the main thrust of the advertisement and carefully draft the additional clauses, which are to be conveyed through the ‘terms and conditions’ section.
• Advertisers are advised not to put trust on the knowledge of the consumers to judge that they are capable of understanding a latent meaning or clause to a certain advertisement as it is irrational to accept that the intellect of every person is one and same. It is to be assumed by the companies that an ordinary reasonable consumer would possess no professional knowledge of a commercial product.
• Ambiguous or alternative version of advertisement can be taken for an evidence against the advertiser for misleading or deceptive advertisement.
• Penalties for non-compliance of the consumer law would be of deterrent nature, which would stop companies from circulating deceptive advertisement for commercial gains.

Advertisers can be imaginative while circulating advertisements and campaigns for promoting and marketing their products, however, they must not mislead or deceive the consumers with false expectation and wrong goods or services as it would be unethical and illegal. In some cases, advertisers offers a particular sale price of a product, which turns out to be unavailable or available in limited quantity. This is a clear example of bait advertisement when sellers allures consumers to approach them for buying the product while the seller would try to convince the buyer to opt for another one at a higher price. However, it is held that it would not be misleading or deceptive on the sellers’ part if they expressly mention that the advertised product has a limited stock of supply (Kupke, Rossini and Kershaw 2014).

In this case, there is a clear picture of bait advertisement, which is alluring consumers to approach TPG for buying the ADSL when they are being pushed to buy the home phone along with it as a mandate. This is a misleading advertisement which is unethical and harassing the consumers greatly. Therefore, such bait advertisements should be screened and the advertiser should be penalized.

Section 18 of the Australian Consumer Law (ACL) refrains companies from engaging in misleading and deceptive conduct, which is likely to mislead or deceive a man of ordinary prudence for commercial gains. While section 29 of ACL lays down detailed provisions for ‘false and misleading representations regarding goods or services. Section 18 has a generalized approach regarding misleading or deceptive conduct in trade and commerce, while section 29 lays down an elaborative discussion regarding false and misleading representation about goods and services provided by a seller to a consumer. In nutshell, it prohibits sellers to promote a product with false promises regarding the standard and quality of the goods and services. Infringement of the provision attracts pecuniary penalty to the offender (Maicibi and Abdullahi 2013). In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd, it was held that a test to judge a conduct whether misleading and deceptive or not, it is to be determined whether such conduct leads people into error.

Legal Opinion and Sect 29 of ACL

The sections are differentiated based on two factors:

Section 18

1. Person engaged in conduct:

Where a person engages orally or in writing for doing something or offering something to another, which can also include silence.

1. Person engaged in trade or commerce:

Such conduct can be interpreted as trade or commerce when it has a commercial aspect attached to it; some commercial gain or loss is involved (Pacific Dunlop v Paul Hogan and ORS)

Section 29

1. False or misleading representation:

False promise or representation is a factor in this provision, which may not lead to deception or fraudulent advertisement to defeat consumerism always.

1. False representation regarding goods and services:

Such false representation involve sale of goods or services.

There are various remedies available for consumers who are deceive through false promises and misleading advertisements. Defenses like:

• Injunction:

Consumers can approach the court to give an injunction to companies who is deceiving consumers with its false representation.

• Refund and additional damages:

Consumers can claim refund of the price paid for the goods or services and may claim damages from such deceiving companies for injuring them financially through such false representations.

• Replace of goods or services:

In case the goods or service is of such nature that it can replaced, consumers may claim for a replacement of a defective product or faulty service.

The Australian Consumer Law (under Schedule 2 of the Competition and Consumer Act 2010) lays down certain consumer guarantees, which protects consumers from being likely to be misled and deceived (Paterson 2013). Provisions for consumer guarantees relating to the supply or goods and services, and contracts are laid down under division 1 of Part 3-2 of the Australian Consumer Law. These guarantees protect consumers from misleading commercial activities in every industry (Legislation.gov.au 2018).

References:

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2010] FCA 1478

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) [2012] FCA 629

Australian Competition and Consumer Commission. (2018). High Court reinstates $2m penalty against TPG. [online] Available at: https://www.accc.gov.au/media-release/high-court-reinstates-2m-penalty-against-tpg-0 [Accessed 6 Oct. 2018].

Competition and Consumer Act 2010

Corones, S., 2014. Australian Competition and Consumer Commission v. TPG Interney Pty Ltd., Forrest v. Australian Securities and Investments Commission: Misleading Conduct Arising from Public Statements: Establishing the Knowledge Base of the Target Audience. Melb. UL Rev., 38, p.281.

John, R. and Willekes, A., 2014. Consumer law: Deceptive advertising: Is it a question of audience?. Law Society Journal: the official journal of the Law Society of New South Wales, 52(3), p.42.

Kupke, V., Rossini, P. and Kershaw, P., 2014. Bait pricing: evaluating the success of regulatory reform in advertising. International Journal of Housing Markets and Analysis, 7(3), pp.333-345.

Legislation.gov.au. (2018). Competition and Consumer Act 2010. [online] Available at: https://www.legislation.gov.au/Details/C2017C00369/Html/Volume_3 [Accessed 7 Oct. 2018].

Maicibi, N.A. and Abdullahi, Y.S., 2013. Criminal and Unethical Behaviours in Organisations: Misuse of Assets and False or Misleading Advertising. Global Journal of Human-Social Science Research.

Pacific Dunlop v Paul Hogan and ORS 1989 FCA 250.

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd – [1982] HCA 44

Paterson, J.M., 2013. Developments in consumer protection law in Australia. Legaldate, 25(2), p.2.

The Australian Consumer Law (Schedule 2 of Competition and Consumer Act 2010)

TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190

TPG Internet Pty Ltd v Australian Competition and Consumer Commission (No 2) [2013] FCAFC 37