The Australian Competition and Consumer Commission launched proceedings yesterday against Taxsmart Group, an accounting and taxation firm with franchises across Australia.
The ACCC alleged Taxsmart Group, its director Scott Andrews, and its business development manager Janine Andrews made false promises in job advertisements for graduate accountant positions.
The group allegedly collected sums of between $45,000 and $80,000 from a number of recently graduated accountants who paid to start a franchise business with Taxsmart. The money was paid on the proviso that at the end of a 12-month supervision program the graduates would be qualified as registered tax agents and could consequently run their Taxsmart franchises.
A number of the employees, many of whom came from non-English speaking backgrounds, allegedly had their employment terminated within the first 12 months of working for Taxsmart, meaning their supervision period was not completed and they were not qualified to operate their business.
The ACCC is taking action against Taxsmart on behalf of 18 of the graduates seeking compensation of the money they put up to be repaid.
ACCC deputy chair Michael Schaper told SmartCompany Taxsmart’s behaviour is “pretty serious”, but he sees it as a relatively clear-cut case.
“False job and false franchise claims have always been important to us,” he says.
Schaper says the take-home message to other businesses is to deliver on the promises made.
“The golden rule here is whether you’re talking to employees or advertising your goods and services, tell the truth,” he says. “Be upfront in your disclosure about what you’re going to do and what your intentions are.”
Hall and Wilcox partner Sally Scott says it’s been common for the ACCC to litigate widely and often for misleading conduct, by issuing infringement notices or court proceedings.
“Most of the cases have related to misleading advertising or misleading sales and most have been in the telco and energy sector,” she says.
But this case targets the finance sector, and has joined Taxsmart’s director and business development manager to the proceedings.
“Ordinarily the ACCC pursues the company and perhaps a director. Interestingly in this case, the ACCC has included a claim against the business development manager. This suggests that the ACCC is looking to test the law as against employees,” Scott says.
She says all employees who deal with consumers or who prepare material, such as recruitment ads, aimed at consumers need to be aware they could be exposed to accusations of misleading conduct.
“This could involve salespeople who make representations to customers, marketing or advertising staff who prepare marketing materials or credit staff who chase debts,” she says.
“In fact, there have been a number of cases over the past year where the ACCC has taken action in relation to threats and warnings made to consumers when chasing debts.”
Scott says any company which recruits needs to be aware of what they’re telling prospective employees or participants in programs, as in this case.
“That’s not simply a matter of being careful of what you put in an employment contract, it’s a matter of considering what representation you make to prospective employees and graduates,” she says.
The matter has been filed in the Melbourne Federal Court’s fast-track List.