Bed maker slammed with $20,000 fine over misleading conduct allegation

An international manufacturer of adjustable beds has paid almost $20,000 for alleged misleading conduct made during an in-home sales presentation, following action by the Australian Competition and Consumer Commission.

The ACCC issued an infringement notice following a presentation in September 26, 2012 when it was alleged a Craftmatic salesperson misrepresented the value of its “lifetime warranty” and the price of a payment plan for one of its beds.

Craftmatic has paid the infringement notice of $19,800, but the ACCC emphasise this is not an admission of guilt.

Hall and Wilcox partner Sally Scott told SmartCompany many companies have started to favour paying ACCC infringement notices in order to avoid going to court.

“There has been a tendency over the past 12 months for companies to consent to fines in order to try to reduce fines and reduce costs. This has resulted in some good collections for the ACCC.

SmartCompany contacted Craftmatic, but received no comment prior to publication.

During the in-home presentation, the salesperson allegedly said it was the first day the Craftmatic bed on offer had been reduced, but this was alleged to be untrue.

ACCC commissioner Sarah Court said in a statement tactics such as these can pressure people to enter contracts which “aren’t as good as they seem”.

“Businesses that engage in-home or door-to-door sales must have effective systems in place to ensure that their salespeople comply with their strict obligations under the Australian Consumer Law,” Court says.

The ACCC says the beds on offer were sold primarily to elderly consumers through the in-home sales presentations, although in December last year Craftmatic decided to cease all of these presentations.

This isn’t the company’s first run-in with the competition regulator.

In 2009, Craftmatic also fell into the ACCC firing line, with the company admitting it had engaged in “unconscionable conduct” by making misleading representations and using a sales method which unduly influenced elderly people in their homes.

Scott says the maximum fine per offence under an infringement notice is $5,500, whereas the maximum penalty if a case goes to court is $1.1 million.

Scott says Craftmatic has been fortunate to escape with a relatively small fine given its prior misconduct in 2009, but says the ACCC would have taken this into consideration when determining the amount.

“If there had been evidence of widespread similar conduct, the fine would have no doubt been greater,” she says.

Scott says over the past 12 months a range of penalties for misleading conduct have been delivered both by the courts and by the ACCC.

“We have seen numerous penalties in excess of $1 million over the past 12 months or so for misleading conduct, the highest being $3.6 million for Optus.”

“At the other end of the scale, we’ve seen penalties under $50,000 for misleading conduct handed out to companies including Foxtel and Furniture Galore.”

Scott says the ACCC is particularly active in this area, targeting the telecommunications, energy and home building industries, but says all should be wary.

“Whilst a certain amount of puffery is permitted, exaggeration or misstatements become unlawful when they cross the line into conduct that misleads or deceives, or is likely to mislead or deceive.”