The director of a collapsed training and recruitment company has been fined $20,000 dollars for multiple breaches of Australian Consumer Law.
The Melbourne Magistrates Court penalised Daniel Chung Keat Leong on August 18 for operations undertaken by his business, Keat Enterprises Pty Ltd between February 2013 and May 2014. He has also been directed to pay costs of $860.
According to Consumer Affairs Victoria, Keat Enterprises advertised over 20 job positions on job seeking websites SEEK and Gumtree, and received over 9,500 applications. What these advertisements failed to mention is the positions were not jobs at all, with the applicants asked to sign up to training courses at a cost of $2000-3000.
The business collapsed into voluntary administration in June 2014 and following action by Consumer Affairs Victoria, the company was fined $165,000 for more than 30 breaches of Australian Consumer Law in April last year.
At the time, Consumer Affairs Victoria told SmartCompany it would not be taking further action to obtain compensation, stating there “would most likely be insufficient resources to make good any compensation order”.
An assessment carried out in 2014 by the liquidator of Keat Enterprises showed $65,000 was owed to 15 employees, and nearly $40,000 was owed to the Australian Tax Office.
Leong himself has now been convicted on three accounts of breaching the ACL and commercial lawyer at TressCox Lawyers Nick Duggal told SmartCompany the case against Leong is “very clear cut”.
“Consumer Affairs going after a company’s director is unusual,” Duggal says.
“While there is potential for liability for employers under false and misleading representations, they’re not usually enforced with this kind of regularity. However, this is a blatant case of misrepresentation.”
Under a charge for false and misleading representations, Consumer Affairs said Leong claimed his company was an accounting firm, despite not offering or undertaking any accounting services. He also portrayed his company as a tax agent, although it was not registered as one.
Leong is also charged in relation to limiting consumer rights, as Keat Enterprises offered agreements to consumers stating the company would not provide refunds.
“Under the ACL, businesses cannot limit a consumer’s right to a refund if there is a problem with the product or service they have bought,” Consumer Affairs said in a statement.
“It’s all about delivering the product or service, it must be fit for consumers,” Duggal says.
“If it can’t be delivered, then the business can’t limit a consumer’s right to a refund.”
The third charge against Leong is for misleading conduct regarding employment, which relates to the misleading and false job advertisements. According to Consumer Affairs, “the majority of the advertisements did not mention any costs involved and, where costs were mentioned, they were described as ‘Software licensing and CPA monitoring costs’.”
Duggal believes this is a “timely reminder” for all businesses, claiming these sorts of cases were not all that unusual.
“When a business is advertising employment, it has to keep in mind that the representation must be sustainable and accurate,” he says.
“Businesses have got to be careful about what they represent as they could be in breach of Australian Consumer Law.”
While Duggal says some businesses can sometimes misrepresent jobs unwittingly, saying they can sometimes “bite off more than they can chew”.
“Sometimes businesses can over-promise in an attempt to induce employees, but this can also be in breach of the ACL,” he says.
SmartCompany was unable to contact Leong for comment prior to publication. Keat Enterprises is no longer operating.