A director and sales manager of a telemarketing company that sold ink cartridges have copped $100,000 in fines for knowingly breaking Australian Consumer Law.
Tuan Nguyen, the sole director of Artorios Ink, and sales manager Thuan Nguyen have each been ordered by the Federal Court to pay a penalty of $50,000 each.
The pair admitted to acting deliberately to mislead and deceive small businesses to generate ink cartridge sales.
Artorios Ink was a telemarketing company that sold printer cartridges to businesses from 2008 to 2012. It went into voluntary liquidation in February after the ACCC began proceedings against it in September 2012.
The Federal Court found that between 2011 and 2012, the company engaged in false and misleading representations to five small businesses.
The misrepresentations included telling businesses that they had agreed to purchase printer cartridges from the company, when there had been no agreement. They also told the small businesses that they were already an approved or regular supplier of the business when in fact they were not.
Artorios Ink also told businesses they instituted proceedings in the Magistrates’ Court of Victoria against the business to obtain payment for printer cartridges, when they had not instituted any such proceedings.
The court also found that the company asserted a right to payment for unsolicited goods, by sending demands for payments for ink cartridges to businesses, which had never been purchased.
Justice Mortimer stated that the conduct involved “deceit” of businesses for financial benefit.
Justice Mortimer also inferred “there was a deliberate and calculated plan constructed to misrepresent to small businesses (through calls to unsuspecting employees or shop managers) some kind of existing supply relationship, then to take advantage of the misrepresentation to supply goods and then demand payment”.
The judge found that the most serious aspect of this was its “premeditated character”.
In addition to the fines, the Court accepted undertakings from the pair that they would not manage or be a director of a corporation for five years.
ACCC deputy chair Michael Schaper said in a statement that the court’s ruling was a lesson for people involved in misleading practices.
“These penalties send a warning to traders that dishonest business practices can result in substantial penalties being imposed against the individuals responsible,” he said.
Schaper said small business should watch out for companies targeting them with misleading claims, perhaps via inexperienced junior staff members who may not know the company’s history.
Hall & Wilcox partner, competition and consumer law, Ben Hamilton told SmartCompany that the conduct of the pair was at the more “extreme” end of misleading actions he had seen.
He said the fine towards the two individuals appeared fair, and commented that when companies are fined for misleading conduct the amount can be far greater.
“The court considers a lot of factors in determining a fine … the judge appears to have been guided by the premeditated character of the offences, which influences the penalty,” he says.
Hamilton advises business owners that to avoid misleading customers, they should ensure their teams are compliant with competition and consumer law.
“Often risks can arise when salespeople [who don’t know the law] are representative of the business,” he says.