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January 23, 2014

ASIC reviews funeral insurance ads

ASIC has announced that TAL Direct Pty Limited (TAL) which sells funeral insurance products under the brand ‘InsuranceLine’ agreed to change its products following ASIC raising concerns regarding TAL’s advertising of funeral insurance.

ASIC was concerned that in TAL’s advertising of its funeral insurance product:

  • premium increases and stepped premiums were not adequately disclosed or explained;
  • qualifications relating to advertised prices were not sufficiently prominent; and
  • quoted prices were not representative of the imagery used in the advertising, including the age of the actors.

TAL withdrew its existing funeral insurance advertisements in June 2013, and announced the introduction of its new range of funeral insurance products, with policy features including:

  • level premiums for the life of the policy; and
  • capped premiums.

Background:ASIC Report 292

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Posted 23rd January 2014 by David Jacobson in Insurance, Marketing

January 16, 2014

Apple gives warranty undertaking

The Australian Competition and Consumer Commission has accepted a court enforceable undertaking from Apple Pty Limited (Apple) following an investigation into Apple’s consumer guarantees policies and practices, and representations about consumers’ rights under the Australian Consumer Law (ACL).

The ACCC was concerned that Apple had made a number of false or misleading representations to a number of consumers regarding their consumer guarantee rights, including that Apple was not required to provide a refund, replacement or repair to consumers in circumstances where these remedies were required by the consumer guarantees in the ACL.

The ACCC was also concerned that on occasions these representations may have arisen from Apple staff and representatives misapplying Apple’s policies, including its 14 day return policy and its 12 month limited manufacturer’s warranty.

In the undertaking Apple has publicly acknowledged that, without limiting consumers’ rights, Apple will provide its own remedies equivalent to those remedies in the consumer guarantee provisions of the ACL at any time within 24 months of the date of purchase.

To avoid any doubt, Apple has also acknowledged that the Australian Consumer Law may provide for remedies beyond 24 months for a number of its products.

From 1 January 2012 suppliers of consumer goods and services must include standard wording in warranties against defects: Schedule 3 of The Trade Practices (Australian Consumer Law) Amendment Regulations 2010 (No. 1).

The rules make it clear that supplier warranties are in addition to 12 basic statutory consumer guarantees. A requirement to pay for a contractual right to which a consumer is already entitled by law will be a false and misleading representation.

The Regulations were made pursuant to Section 102 of the Australian Consumer Law which is contained in Schedule 1 of Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010.

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Posted 16th January 2014 by David Jacobson in Consumer Law, Marketing

January 10, 2014

ACCC v TPG: is the dominant message of your ad misleading?

In Australian Competition and Consumer Commission v TPG Internet Pty Ltd[2 013] HCA 54 the High Court of Australia upheld a $2million penalty imposed on TPG for misleading advertisements relating to its multi-media advertising campaign on television, radio, internet and print for its ADSL2+ service in 2010-2011.

The TPG advertisements prominently displayed the offer to supply broadband internet ADSL2+ service for $29.99 per month. Much less prominently, the advertisements qualified this offer, stating that it was made on the basis that the ADSL2+ service was available only when bundled with a home landline telephone service for an additional $30.00 per month (with a minimum commitment of six months). In addition, TPG required the consumer to pay a setup fee of $129.95 plus a deposit of $20.00 for telephone charges.

According to the High Court the "dominant message" of the advertisements is of crucial importance.

It agreed with the trial judge who decided that "each advertisement had the same dominant message, namely: "Unlimited ADSL2+ for $29.99 per month". His Honour found that the "ordinary or reasonable consumer taking in only the dominant message would have the impression that the entire cost of the service is $29.99 per month, with no other charges and no obligation to acquire another service"; and the balance of the advertisement which contained that information was not given sufficient prominence to counter the effect of the headline claim".

The High Court majority said:

" in this case, the advertisements were presented to accentuate the attractive aspect of TPG's invitation relative to the conditions which were less attractive to potential customers. That consumers might absorb only the general thrust or dominant message was not a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was an unremarkable consequence of TPG's advertising strategy. In these circumstances, the primary judge was correct to attribute significance to the "dominant message" presented by TPG's advertisements. ...

It may be accepted that if the hypothetical reasonable consumer is taken to know that ADSL2+ services may be sold as part of a bundle with telephony services, then, if he or she brings that knowledge to bear in a conscious scrutiny of the terms of TPG's offer, he or she might be less likely to form the impression that the offer was of an ADSL2+ service available without a requirement to take and pay for an additional service from TPG. But the circumstance that many consumers might know that ADSL2+ services are commonly offered as a "bundle" was not apt to defuse the tendency of the advertisements to mislead, especially where the target audience is left only with the general thrust or dominant message after the evanescence of the advertisement."

In respect of the penalty the High Court majority said:

"General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct. TPG's campaign was conducted over approximately 13 months at a cost to TPG of $8.9 million. It generated revenue of approximately $59 million, and an estimated profit of $8 million. TPG's customer base grew from 9,000 to 107,000 during this period, although it cannot be said that this was at the expense of TPG's competitors....

The pecuniary penalty fixed by the primary judge did not exceed that which might reasonably be thought appropriate to serve as a real deterrent both to TPG and to its competitors."

Although the High Court reached its decision by a 4-1 majority, 3 judges of the Full Court of the Federal Court had reached the opposite result in allowing an appeal from the trial judge who imposed the original $2million penalty.

It is likely that the ACCC will use the principles when examining ads for insurance, banking and energy products.

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Posted 10th January 2014 by David Jacobson in Marketing, Web/Tech

Management of online review platforms

The Australian Competition and Consumer Authority (ACCC) has released guidelines concerning the use and management of online review platforms.

Review platforms are sites which specialise in presenting product reviews about a range of businesses. Consumers expect reviews to be independent and genuine to help them make more informed purchasing decisions.

The publication discusses the impact of user-generated comments and business reviews on consumer behaviour. The ACCC was of the view that both positive and negative reviews are susceptible to misuse and have the potential to distort public perception.

The ACCC is concerned that there is an increase in paid for and fake reviews.

Businesses and review platforms that do not remove reviews that they know to be fake risk breaching the Competition and Consumer Act 2010.

Reviews may mislead consumers if they are presented as impartial, but were written by the reviewed business, a competitor, someone paid to write the review who has not used the product or someone who has used the product but written an inflated review to receive a financial or non-financial benefit.

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Posted 10th January 2014 by David Jacobson in Consumer Law, Marketing, Web/Tech

ASIC acts on misleading super advertising

ASIC has announced that Media Super Limited has paid a $10,200 penalty to comply with an ASIC infringement notice after producing potentially misleading advertisements.

Media Super published the ads as a factsheet in September 2012. The factsheet titled ‘Self-managed super? You be the judge’, compared the costs and benefits of self-managed super funds with the Media Super fund. It appeared on Media Super’s website and was sent to all fund members.

ASIC was concerned that the factsheet inaccurately represented the costs and benefits of the Media Super funds compared to self-managed super funds.

The fact sheet omitted a component of Media Super’s fees.

Media Super corrected the error immediately after it was identified.

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Posted 10th January 2014 by David Jacobson in Corporations Act, Marketing, Superannuation

December 17, 2013

Do Not Call Register review

The Government has issued a discussion paper reviewing the optimal period of registration on the Do Not Call Register to opt out of receiving most unsolicited telemarketing calls and marketing faxes.

When the Register was first established, registrations were valid for three years from registration. Since 2007, the registration period has been extended on three occasions, and is now set at eight years.

Public comment is sought on four options:
1.Reduce the period of registration to three years
2.Retain the current eight year registration period
3.Extend the registration period to indefinite
4.Remove the need to register

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Posted 17th December 2013 by David Jacobson in Do Not Call Register, Marketing, Privacy

December 9, 2013

Misleading savings account names

ASIC has announced that it has found a number of banks and mutual authorised deposit-taking institutions (ADIs) were using the term ‘deeming account’ to promote a basic savings account to pension recipients.

ASIC was concerned the way advertising linked these savings accounts to the Government’s deeming rates (which form part of the Government’s social security income test) could mislead consumers. In most cases, the savings accounts offer lower interest rates than the deeming rates, particularly for lower account balances.

ADIs offering transaction accounts for seniors and pensioners should make sure the descriptions of these accounts do not lead consumers to think the accounts offer "deeming" rates when they do not.

The Australian Bankers' Association has developed a set of guidelines for disclosure about such accounts in response to ASIC's concerns about aspects of the marketing of pensioner products.

Banks have voluntarily agreed to:

  • Ensure these accounts are not named ‘deeming accounts’;
  • Phase out certain descriptions that provide the impression that the interest rates on these products matches the deeming rate set by the Federal Government, such as ‘comparable to’, ‘compatible with’, ‘guided by’, ‘reflective of’ and better explain the link between the deeming rate set by the Federal Government and the commercial decisions taken by banks and other financial institutions when setting the interest rate on these accounts; and
  • If banks structure the interest rates on these products in a tiered manner according to the account balance, ensure this is clearly disclosed as a feature of the account.

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Posted 9th December 2013 by David Jacobson in Financial Services, Marketing

October 14, 2013

Case note: Do Not Knock Sticker means “go away”

In Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 the Federal Court of Australia decided that a Do Not Knock Sticker (see here) conveyed a request for a door to door salesperson for AGL to leave premises for the purposes of section 75(1) of the Australian Consumer Law.

Section 75 of the Australian Consumer Law requires that a dealer who calls on a person at any premises for the purposing of negotiating an unsolicited consumer agreement must leave the premises immediately on the request of:
(a) the occupier of the premises, or any person acting with the actual or apparent authority of the occupier; or
(b) the person (the prospective consumer) with whom the negotiations are being conducted.

Failure to comply with requirements can lead to maximum penalties of $50,000 for a body corporate and $10,000 for an individual.

The question was whether the sticker was a "request".

Even though the ‘Do Not Knock Sign’ did not contain an express request to leave the premises Justice Middleton decided that "it was an on-going or continuing request directed to all salespersons who came to the door.... the words “DO NOT KNOCK” were clearly visible on (the) door. A pictorial depiction of a fist knocking with a line through it was also clearly visible. There is no ambiguity to the message conveyed to a salesperson (to whom they were directed) by these words and images – the message was an unambiguous request to leave the premises, without knocking on (the) door"

Justice Middleton concluded that:

" By directing the salesperson not to knock and stating that the salesperson was not welcome on the premises, it conveyed a clear direction that the salesperson was not authorised to carry out the purpose for which he had entered the premises and therefore that he should immediately leave the premises. If the occupier of the premises had made similar oral statements to the salesperson, it would have constituted a “request” for the salesperson to leave. No different result should follow by reason of the fact that the statements were contained in a sign displayed on the front door of the premises. "

The case has been adjourned for further hearing in relation to penalty.

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Posted 14th October 2013 by David Jacobson in Consumer Law, Marketing, Trade Practices

September 23, 2013

Draft APP Privacy Guidelines: second stage released

From 12 March 2014, the Australian Privacy Principles (APPs) will replace the National Privacy Principles and Information Privacy Principles.

The Office of the Australian Information Commissioner (OAIC) has released draft Australian Privacy Principles (APP) Guidelines for consultation. The Guidelines outline how the OAIC will interpret and apply the APPs.

Consultation on the draft Australian Privacy Principles (APP) Guidelines 6 to 11 (Parts 3 and 4) is now open. This forms the second stage of APP Guidelines to be released for consultation.

Consultation on Chapters A to D and 1 to 5 has closed.

The Guidelines for Chapters 6 to 11 cover:

  • APP 6 use or disclosure of personal information
  • APP 7 direct marketing
  • APP 8 cross-border disclosure of personal information
  • APP 9 adoption, use or disclosure of government related identifiers
  • APP 10 quality of personal information
  • APP 11 security of personal information

The third stage of draft guidelines (APPs 12 & 13) will be released in October.

Langes can advise you on the impact of the APPs on your business.

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Posted 23rd September 2013 by David Jacobson in Marketing, Privacy

September 10, 2013

Product terms not transparent: pet insurance

When financial product features, costs and incentives are not transparent consumers are prevented from making well-informed financial decisions or comparing products.

ASIC has announced that improvements have been made to disclosure in pet insurance product disclosure statements (PDSs) and websites in response to concerns raised by ASIC as part of a targeted industry-wide review.

There has been a significant increase in disputes received by the Financial Ombudsman Service Limited (FOS) about pet insurance during 2012 and 2013.

ASIC’s review identified concerns about disclosure in some pet insurance PDSs and websites including:

  • Insufficient or confusing disclosure about policy limits, pre-existing conditions (including conditions that consumers are likely to consider unusual or unexpected) and policy exclusions.
  • some of the PDSs did not make it clear that pet insurance generally excludes cover for pre-existing conditions that occurred prior to the purchase of pet insurance, even if the pre-existing condition last resulted in symptoms or treatment many years beforehand, and
  • some of the PDSs and some of the online material (such as online quotes) did not clearly state the limits to the amount of cover provided per year and/or per illness or accident.
  • Insufficient disclosure or non-disclosure of the need for consumers to make co-payments and pay excesses in the event of a claim.
  • The use of worked examples of benefit amounts and other promotional material conflicting with or not accurately reflective of the policy
  • Representations comparing pet insurance to health insurance (which is a different type of insurance product with different features of cover).

ASIC has previously raised disclosure issues in respect of funeral insurance.

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Posted 10th September 2013 by David Jacobson in Financial Services, Insurance, Marketing
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