Court slaps $500,000 penalty on publishing companies who ripped off small businesses with bogus ad scheme

The Federal Court in Brisbane has ordered three publishing companies and their director to pay penalties totalling $500,000 for swindling small businesses by spruiking advertising services that were never requested or provided.

The Australian Competition and Consumer Commission brought the proceedings in which the publishing companies and the companies’ director Andrew Clifford admitted engaging in misleading and deceptive conduct, harassment and coercion, and unconscionable conduct.

Justice Dowsett imposed penalties of $200,000 on the Elite Publishing Group, $125,000 on Wiltshire Publishers, $75,000 on Exclusive Media & Publishing, $100,000 on Clifford and ordered payment of $35,000 towards the ACCC’s costs.

The publishing companies contacted mostly small businesses by telephone and told them that they had already paid for or agreed to advertising in one of the companies’ magazines.

The publishing companies would then send the small businesses a document and invite them to sign it in order to receive complementary copies of the magazines.

The publishing companies then claimed the signed document was in fact an agreement to buy advertising services, and demanded payment of around $500 for each.

The companies also admitted they used harassment and coercion and acted unconscionably when pursuing payment from some businesses.

This included threatening legal proceedings, or claiming that legal action had commenced against a business.

The publishing companies also claimed 500 copies of certain magazines carrying the businesses’ advertisements would be distributed to various organisations when they never intended to, and never did, distribute the magazines.

The court imposed injunctions on all the publishing companies and a fourth company, Superior Publications, which stop them from being involved in similar conduct for a period of five years.

An injunction was also imposed on Clifford, restricting his management of corporations for five years and preventing him from continuing to be a director of, or managing, the publishing companies.

ACCC chairman Rod Sims said the outcome confirms companies, and their directors, who mislead people into entering agreements and then demand payment from them can be found to have engaged in unconscionable conduct and harassment.

“It also sends a strong message that the ACCC will use its powers to take action against companies that make a living out of deceiving small businesses,” he said

Bob Galbally, of criminal law firm Galbally Rolfe, represents Clifford and his publishing companies and told SmartCompany not all of the claims made by the ACCC stuck.

“My client has made admissions which have resulted in a restraining order from managing a corporation for five years. He has accepted pecuniary penalties against himself and his companies,” he says.

“He has also been injuncted from a repetition of the offending conduct. However, the admissions did not embrace all the ACCC allegations.

“The matter is now closed as far as he is concerned. He regrets the process he has endured for a lengthy period; he simply wishes to move on with his family and put this behind him.”