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Fake testimonials come at a high price tag

A company that sold solar panels has been ordered by the Federal Court to pay a $145,000 penalty for disseminating fake testimonials and making false country of origin product claims.

Following action by the ACCC (Australian Competition and Consumer Commission), two companies trading as Euro Solar and Australian Solar Panel, were ordered to pay combined penalties of $125,000 for the false and misleading conduct.

The sole director was also ordered to pay a penalty of $20,000 for his involvement in the conduct.

Specifically the court found that video testimonials published on Youtube, as well as written testimonials published on the respective websites were not made by genuine customers of the companies.

ACCC Chairman Rod Sims said this was the ACCC’s first litigated outcome in relation to the specific prohibition against fake testimonials under the Australian Consumer Law.

“Consumers should be able to trust that testimonials give honest feedback about a consumer’s experiences with a service or product. If they are not genuine, consumers may be enticed into making a purchase that they would not have otherwise made,” Sims said.

The court also found that the companies falsely claimed the panels were made in Australia, when they were in fact made in China.

The misleading representations were made online, in newspapers and on television between November 2012 and September 2013 and were brought to the ACCC’s attention by competing businesses.

“Credence claims such as country of origin can be a powerful marketing tool for businesses, with consumers often prepared to pay a premium for products made in Australia,” Sims said.

“Businesses making misleading representations can harm consumers by influencing them to purchase products, sometimes at a premium price, they otherwise wouldn’t choose to. They can also harm competitors who accurately represent their products by creating an unfair playing field,” he added.

In the court judgement, Justice Besanko found that the companies knew that the representations made were both false and misleading, and willingly engaged in the conduct.

His Honour also found that it was “suggested in some of the advertisements that not only were the solar panels made in Australia but that customers or potential customers ought to be supporting them because of that fact” and that these representations “were a central part of the respondents’ business and marketing strategy”.

In addition to penalties, the court also made other orders by consent including corrective advertising and a contribution towards the ACCC’s costs.

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Stephanie Zillman

Stephanie Zillman

Stephanie is the editor-at-large of Dynamic Business. Stephanie brings with her a passion for journalism, business, and new ideas. On her days off, you might find her reading a book on the beach.

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