Compare the Market cops $10,000 fine for misleading ads

It may have run a successful ad campaign mistaking the word ‘market’ with ‘meerkat’, but insurance comparison website Compare the Market has not won any fans for mistakes made in its most recent advertising, copping a $10,200 fine from the competition watchdog.

The Australian Competition and Consumer Commission handed the company the penalty after it found recent claims in its advertising to be false or misleading.

Compare the Market claimed its website compared more funds than any other insurance comparison service in the country, when there are at least two other Australian websites that compare more health insurance funds – including the public website operated by the Private Health Insurance Ombudsman.

Compare the Market distributed a letterbox pamphlet in Queensland, New South Wales and Victoria between March and May this year that read: We now compare more health funds than any other website in Australia” andCompare more health funds than anywhere else”.

The company also made similar representations on its website, banner advertising, flyers, television infomercials and a digital display in its office foyer.

Compare the Market released a statement confirming it paid a fixed penalty of $10,200 following the issue of an infringement notice by the ACCC.

“Compare the Market immediately withdrew the relevant marketing material from circulation, upon receipt of the ACCC’s concerns,” said the statement.

“Compare the Market respects the important role of the ACCC, and remains committed to providing Australians with a clear and simple way of comparing everyday products and services.”

Sally Scott, partner at Hall & Wilcox, told SmartCompany if a comparison statement made by a business is incorrect, it is seen as misleading and exposes the business to action by the ACCC.

“If a business is going to make a claim comparing its offering to that of other businesses, whether it is a comparison of price or volume, then it must ensure that the comparison is accurate on day one and for as long as the representation is made,” says Scott.

“This means that the business needs to do its due diligence on day one and then monitor that it remains accurate while the claim continues to be made, retaining all records.”

Scott says these tasks can be difficult because businesses need to ensure nothing is missed.

“In Compare the Market’s case, they would have needed to check every other website that compared policies and determined whether Compare the Market compared more funds,” she says.

Scott says in some cases such an exercise may not be practical. But even if a business misses one or two competitors when completing its due diligence, as in the Compare the Market case, it can get caught.

“Businesses need to keep in mind that they can get stung for misleading conduct even if they make a seemingly innocent mistake. If a claim is misleading, it’s misleading, regardless of intention,” says Scott.

Scott says ongoing monitoring can also be difficult and suggests if a business cannot monitor a claim, they should not make it.

“They should consider other ways of putting their sales pitch,” says Scott.

Scott says these sorts of comparison claims are inherently risky and businesses should retain records and be in a position to prove any claims they make.

“Some statements by businesses are so exaggerated and unrealistic, such as ‘best steak in town’, that they come across as unbelievable and just puffery. However, any claims that do come across as genuine, need to be accurate,” she says.

Scott also says the case serves as a reminder to consider where your advertising is making these claims – in this case, across websites and even in its office foyer.

“Businesses need to think outside the square and consider all possible places that they make representations and then whether those representations are misleading,” says Scott.

“It is becoming more common these days for businesses to have proposed advertisements checked for the risk of misleading conduct, but it is still less common for businesses to turn their mind to other places in which they make representations.”

You can help us (and help yourself)

Small and medium businesses and startups have never needed credible, independent journalism and information more than now.

That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.

Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.

Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.

Trending

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments