Federal Court penalizes two companies for fake testimonials and false country of origin representations
Two Australia-based companies have been fined a combined total of $125,000 for publishing fake testimonials and making misleading representations about the country of origin of the products they are selling.
According to the media release from the Australian Competition and Consumer Commission (ACCC), the Federal Court has ruled that P&N NSW Pty Ltd (trading as Euro Solar) and Worldwide Energy and Worldwide Manufacturing Pty Ltd (WEMA, formerly trading as Australian Solar Panel) pay the fine resulting from the fake video testimonials published on YouTube by both companies and written testimonials by fake customers published on WEMA’s official website.
Furthermore, the director of P&N and WEMA, Mr Nikunjkumar Patel, was also fined with $20,000 for his involvement in the case.
“This is the ACCC’s first litigated outcome in relation to the specific prohibition against fake testimonials under the Australian Consumer Law,” ACCC Chairman Rod Sims said.
“Consumers should be able to trust that testimonials give honest feedback about a consumer’s experiences with a service or product. If they are not genuine, consumers may be enticed into making a purchase that they would not have otherwise made.”
P&N, P&N NSW and WEMA were also found guilty on the grounds of misleading representations to customers that they manufactured or supplied solar panels made in Australia. The evidence produced proved that the panels’ country of origin was China.
The misleading representations were made online, on TV and in newspapers in the period between September 2013 and November 2013, and were flagged by competing businesses, prompting the ACCC to act on the matter.
“Credence claims such as country of origin can be a powerful marketing tool for businesses, with consumers often prepared to pay a premium for products made in Australia,” Mr Sims said.
“Businesses making misleading representations can harm consumers by influencing them to purchase products, sometimes at a premium price, they otherwise wouldn’t choose to. They can also harm competitors who accurately represent their products by creating an unfair playing field.”
Justice Besanko found both companies and Mr Petel guilty as charged for carelessness and reckless conduct, as well as false representation of the country of origin, which was “a central part of the respondents’ business and marketing strategy”.
In addition to penalties, the Court also made other orders by consent, including injunctions, declarations, corrective advertising and a contribution towards the ACCC’s costs.