"Manifestly inadequate": ACCC appeals $1 million Employsure penalty

"Manifestly inadequate": ACCC appeals $1 million Employsure penalty

Australia’s competition watchdog has vowed to appeal a $1 million penalty handed down by the Federal Court against Sydney-based Employsure on the basis the fine is “manifestly inadequate” after the human resources company was found last year to be making misleading representations in Google ads.

The ads were published between August 2016 and August 2018 and appeared in response to search terms such as ‘fair work ombudsman’, ‘fair work commission’ and featured headlines like ‘Fair Work Ombudsman Help – Free 24/7 Employer Advice’.

Originally seeking a penalty of $5 million the Australian Competition and Consumer Commission (ACCC) took action after it received more than 100 complaints relating to Employsure, including from small businesses which contacted the firm after viewing a Google ad and thought they were dealing with a government agency.

“We were concerned Employsure’s Google ads potentially misled thousands of Australian businesses over a two-year period into contacting Employsure, thinking they were dealing with a government agency, or one affiliated with the government,” ACCC deputy chair Mick Keogh said.

“We believe a higher penalty is necessary and appropriate having regard to the nature of the conduct and size of Employsure, to ensure that internet advertisers are sufficiently deterred from misleading consumers about who they are dealing with.”

In August 2021, the Full Federal Court ruled that Employsure’s Google Ads were misleading in large part because of the use of government agency names in the largest and most prominent typeface, and because the ads omitted any reference whatsoever to the company.

“Employsure has made significant changes and improvements since first being approached by the ACCC in 2018 regarding Google ads which ran from 31 July, 2017, to 12 April, 2018. These ads have not been live or part of our strategy since,” an Employsure spokesperson said.

“Although disappointed with the original decision against Employsure, we accepted it, along with the $1 million penalty. The proposed $5 million penalty the ACCC originally sought was a demand which Federal Court Justice John Griffiths said made him “gag”.

“The injunctive relief, which was rejected, “failed to demonstrate that any useful purpose will be served by one, and that the conduct was not deliberate or likely to recur.””

A hearing for the appeal before the Full Federal Court will be fixed at a later date.

“This finding by the Full Federal Court sends a very strong message to internet advertisers that misleading consumers and small businesses by using combinations of words that are the same or similar to the names of government agencies to attract customers risks enforcement action and significant penalties,” said Keogh at the time of the ruling.

“Employsure is a private company which is not affiliated with the government, and provides workplace relations advice to businesses under long-term contracts with on-going fees.

“Any attempt to misrepresent a business as being part of the government is a serious breach of trust, and of our consumer laws.”

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