ASIC has recently announced the results of action taken by it in relation to two different sets of advertisements. In one case, it only issued infringement notices under Section 12DB of the ASIC Act, but in the other case it entered into an enforceable undertaking as well as issuing infringement notices.
In each case a separate infringement notice was issued for each different form of advertisement eg magazine, website, television, youtube video.
But the enforceable undertaking requiring the remedying of breaches and the appointment of an independent expert compliance consultant was only required for the more serious breach.
AAMI’s misleading car insurance advertising
ASIC announced that AAMI has paid $20,400 in penalties after ASIC issued two infringement notices under Section 12DB of the ASIC Act for false or misleading advertisements promoting AAMI car insurance (one online, one on television).
The television and online advertisements included the headline claim ‘AAMI FLEXI-PREMIUMS COULD SAVE YOU AN AVERAGE OF $357 OFF YOUR NEW POLICY’ and a verbal representation stating ‘Switch your car insurance and AAMI Flexi- Premiums could save you an average of $357 off your new policy.’
ASIC was concerned that the representations were false or misleading because they:
•were likely to give the impression that savings could be achieved by consumers if they switched their car insurance from their current insurer to AAMI. In fact, the specified savings were based on a comparison between different AAMI premiums with different levels of excess chosen, rather than between a competitor’s product and AAMI’s product.
•did not adequately convey that AAMI customers would need to choose the maximum level of excess in preference to the minimum level of excess to achieve the specified dollar savings. Based on AAMI’s analysis of a sample of their own customers, AAMI was aware that most customers did not choose the maximum excess.
Although AAMI included fine print within the advertisements to explain how the savings could be achieved, ASIC considered these to be ineffective having regard to the relative size of font, density of text, and visual and other messages.
Equanimity’s misleading home loan advertising
ASIC announced that Equanimity Concepts Pty Ltd, has paid $30,600 in penalties after ASIC issued three infringement notices under Section 12DB of the ASIC Act for misleading advertisements promoting home loan products (one for the magazine ads, one for its website and one for a youtube video).
From January 2012 to July 2014, Equanimity advertised on its website, YouTube and in numerous in-flight magazines, the Australian Women’s Weekly and police journals that consumers could pay off their home loan in a very short amount of time. For example, one line read, ‘Pay off your 25 year home loan in less than 5 years.’
In fact Equanimity advised customers to use the equity in their home to borrow funds to buy an investment property and to use all rental income and tax benefits to reduce the home loan debt and then sell the investment property for a capital gain.
ASIC was concerned that the assumptions in the financial modelling were unrealistic and that customers were mislead.
Equanimity admitted to ASIC that it did not have Credit Act advertising compliance policies in place.
In addition to payment of the penalties, Equanimity entered into an enforceable undertaking (EU) with ASIC in November 2014 following an investigation into the ads.
