Federal court finds Safety Compliance Pty Ltd  misled small businesses into purchasing safety products

A recent Federal Court decision, based on proceedings brought by the ACCC, will be of interest to all small businesses or franchisees who are approached by new suppliers claiming that they are obliged by law to purchase certain products – in this case, occupational health and safety (OHS) equipment.

The case also serves as an important reminder to small businesses: always check that any business claiming to be affiliated with a government agency actually is genuinely associated with that body.

Likewise, if a business approaches a franchisee claiming that their franchisor authorised purchases, franchisees should confirm this with their franchisor.

The Court has declared that Safety Compliance Pty Ltd breached the Australian Consumer Law and theTrade Practices Act 1974 (now called the Competition and Consumer Act 2010) by making false or misleading representations and engaging in misleading or deceptive conduct towards small businesses in supplying safety wall charts and first aid kits.

The Court found that Safety Compliance made false or misleading representations (claims) to small firms that workplace health and safety laws required businesses to maintain safety wall charts and first aid kits, such as those sold by Safety Compliance. The Court also found that Safety Compliance falsely represented that it was affiliated with, or actually was, a state or territory workplace health and safety agency.

The Court also found that Safety Compliance had contacted a number of individual franchisees of a franchise group, and had represented to the franchisees that the franchisor had agreed to purchase products from Safety Compliance, when in fact it had not agreed to make such a purchase.

“This is an important outcome, as small businesses operators generally take their health and safety obligations very seriously but can often be time poor and susceptible to telemarketers promoting products relating to workplace health and safety,” ACCC Deputy Chair Dr Michael Schaper said.

The Court will decide at a later date what it will require Safety Compliance to do. The ACCC has asked the Court to apply pecuniary penalties, injunctions and costs against the company. For the individuals involved, the ACCC is asking the court for disqualification orders, which would ban them from managing corporations in the future.

For more information read the ACCC media release. If you think you may be the victim of a similar scheme, contact the ACCC Infocentre on 1300 302 502.

Small Business team

Australian Competition and Consumer Commission (ACCC)

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