Financial services company stung with $30,600 in penalties after get-rich-quick advertising claims

Financial services company stung with $30,600 in penalties after get-rich-quick advertising claims

 

An Australian financial services company has been stung with more than $30,000 in penalties for potentially false and misleading advertising.

Online Capital Markets, based in Sydney, has paid three $10,200 infringement notices after the Australian Securities and Investments Commission was concerned about a number of claims in its advertisements and emails about its foreign exchange trading platform.

The claims including “$2533 in just seven days!” and “learn how to increase your monthly income”.

The corporate regulator believed the advertisements and emails were misleading because they gave people the impression Online Capital Market’s services could be relied upon to provide substantial profits quickly and consistently.

In particular, ASIC was concerned the statements did not adequately convey the high-risk nature of foreign exchange trading.

“While they referred to risks and contained disclaimers, these messages were in fine print and were ineffective to correct the dominant message created by the headline claims,” ASIC said.

ASIC commissioner Greg Tanzer said he hopes the penalty will send a strong message to businesses doing the wrong thing.

“Margin foreign exchange and derivative trading is high-risk and gives volatile returns,” Tanzer said.

“Consumers should not be misled by false claims about the level or consistency of returns achievable from such trading.”

Ursula Hogben, principal and general counsel at LegalVision, told SmartCompany all businesses need to be mindful that Australian Consumer Law prohibits them from engaging in misleading or deceptive conduct.

“For advertising, marketing materials and other correspondence, it is important that businesses consider both the accuracy of information and the impact,” Hogben says.

“Businesses should consider how statements could be interpreted. It is important to avoid misleading or deceptive statements, to keep a good relationship with customers and the Australian Competition and Consumer Commission.”

Hogben also points out there are additional regulations for financial services businesses.

“The business must not make false or misleading statements that are likely to induce a customer in applying for financial products,” she says.

“In this case, OCM should have known that by making that kind of statement, it induced potential customers to purchase their services under a mistaken belief that the returns were guaranteed.”

The action against Online Capital Markets follows a number of penalties recently imposed on financial services companies.

Last month ASIC cancelled the financial services licence of LSG Group, while in August a British Virgin Island company FIBO Group was ordered to stop providing unlicensed financial services to Australians.

SmartCompany was unable to contact Online Capital Markets prior to publication.  

 

 

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