Eyeware retailer Oscar Wylee has been ordered to pay $3.5 million in penalties by the Federal Court after its 'buy a pair, give a pair' marketing claim was found to be misleading.
The company admitted that between January 2014 and December 2018 it made statements that for each pair of glasses a customer purchased it would donate another pair to someone in need.
The Australian Competition and Consumer Commission (ACCC) unveiled in December 2019 that over the five-year period the company sold 328,010 pairs of glasses, but only donated 3,181 pairs without lenses to charity.
This equates to about one set of frames for every 100 pairs of glasses sold.
As such, the Federal Court has determined a $3.5 million fine is appropriate for Oscar Wylee's misleading representations in breach of Australian Consumer Law.
"Oscar Wylee promoted its charitable activities as a core reason why consumers should buy Oscar Wylee glasses, but its claims were false and were made in circumstances where consumers could not easily verify these claims for themselves," ACCC deputy chair Delia Rickard said.
"The misleading conduct also portrayed Oscar Wylee as a socially-conscious company that made significant donations of glasses to people in need, which, because this was not true, unfairly differentiated it from other brands in the market.
"At the same time, Oscar Wylee deprived disadvantaged people in need of the benefits it promised in its advertising."
Oscar Wylee also admitted to making false or misleading representations to consumers between January 2014 and December 2018 that it was closely affiliated with the charitable organisation, Rose Charities.
However, during this period Oscar Wylee only made one donation worth $2,000 to Rose Charities plus 100 frames in 2014.
No further donations were made to Rose Charities after this time, despite Oscar Wylee continuing to claim an affiliation with the organisation.
"Oscar Wylee stood to profit from inducing consumers to purchase its products and still does," said Justice Katzmann in her judgment.
"It built its reputation by engaging in the contravening conduct, appealing to socially-conscious consumers who wanted to support charitable causes through their purchasing behaviour.
"Its conduct was a betrayal of that promise."
Rickard says the $3.5 million penalty should serve as a reminder for any company considering making false claims to its customers in its marketing material, whether online, by email, on video, on social media or in store.
"Oscar Wylee has taken advantage of the charitable nature and goodwill of consumers and its behaviour risks diminishing consumer confidence to support other businesses that genuinely engage in philanthropic activities," Rickard said.
In addition to imposing penalties, the Court ordered Oscar Wylee to publish information online explaining its breaches and pay a contribution to the ACCC's costs.
According to a spokesperson from Oscar Wylee the company has taken corrective action in response to the court action and in line with our ongoing committment to corporate social responsibility.
"We have donated 336,585 pairs of glasses frames and $80,000 cash donations to charities supporting eyecare for the disadvantaged," says the spokesperson.
"We have also adopted a strict Trade Practices Compliance Policy, directed to the protection of consumers, and appointed a Compliance Officer responsible for its implementation."Oscar Wylee acknowledges the importance of the issues raised by the ACCC and sincerely regrets the contraventions of the ACL."
Business News Australia