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If your customers are in a vulnerable position, ensure your sales promises are bulletproof or risk paying a hefty price

Consumer Law News | October 2014

The Court in ACCC v Safe Breast Imaging Pty Ltd (No. 2) 2014 FCA 998 (16 September 2014) found that Safe Breast Imaging Pty Ltd ("SBI") had contravened the Australian Consumer Law ("the ACL") by misleading and deceiving consumers through the promoting of their services and the representations that were made by SBI about the risks of breast cancer and potential alternatives to mammography.

From April 2009 to August 2011, Safe Breast Imaging ("SBI") (the First Respondent) and Ms Joanne Firth ("Ms Firth") (the Second Respondent) and sole director, shareholder and business manager of SBI, conducted breast imaging services using a device known as a multi-frequency electrical impedance mammograph ("MEM Device"). The services were offered to customers in various parts of Australia through promotional activities such as Google AdWords, internet videos (including YouTube), pamphlets and on the company's website.

SBI ordinarily charged a fee of about $145.00 for their services, consisting of taking images of the customer's breasts using the MEM Device, interpreting those images and the customer's answers to a questionnaire, and preparing a 'Breast Health report', which was provided to each customer with an information package that contained information on the MEM Device, an explanation of risk profile scores disclosed in the report and a "Frequently Asked Questions' document.

The ACCC alleged that the promotional materials and the 'Breast Health Report', together with the information pack conveyed a number of false or misleading representations, including that:

  • Breast imaging using the MEM Device could provide an adequate scientific medical basis for assuring a customer that they do not have breast cancer;
  • There was an adequate scientific medical basis for breast imaging using the MEM Device as a substitute for mammography; and
  • Australian registered medical doctors were involved in providing the breast imaging service, in particular the interpreting of the images, and in preparing the 'Breast Health Reports'.

Additionally, the ACCC claimed that Ms Firth was knowingly concerned in or party to the contraventions by SBI. As a punitive measure and as a means of protecting the general public, the Australian Competition and Consumer Commission ("the ACCC") sought to have Ms Firth disqualified from managing companies.

Held

The Court noted that due to the potential risk of serious harm which could arise from the conduct of SBI and Ms Firth, the sentence in this case was important as a deterrent to others against committing similar offences. Ms Firth and SBI were ordered to send corrective letters to their customers and to post notices on their Facebook profiles outlining the Court's findings. This notice was also sent to customers of SBI by the ACCC, as permitted by the Court.

The Court found that SBI and Ms Firth to have contravened the sections of the ACL through their conduct, including:

  • Engaging in conduct, in trade or commerce, that is misleading or deceptive or that is likely to deceive or mislead [Section 18];
  • Making a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits [Section 29(1)(g)]; and
  • Misleading conduct as to the nature of services [Section 34].

As a result of SBI deceptively promoting a service as an alternative to mammograms, the Federal Court in this case imposed a fine of $200,000.00 on SBI and a fine of $50,000.00 ordered against Ms Firth personally, who was also disqualified under the ACL from managing corporations for 4 years.

The representations made by SBI through their promotional material are a lesson in caution and accuracy when promoting your services to the public. It is important that services providers exercise caution when making comparative representations and other claims to the public, specifically for medical services providers. These representations must comply with accepted medical practices and be supported by scientific evidence.

If you have any questions or concerns regarding your company's or a director's duties in the development of your promotional and advertising material to check compliance with the provisions of the Australian Consumer Law, please contact us Forum Law, solicitors conveniently located in the inner west of Sydney on (02) 9560 3388.


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