Court finds energy watch advertising campaign misleading

The Federal Court has found that Energy Watch Pty Ltd misled consumers in relation to its energy price comparison service and the savings that could be achieved using the service following action by the Australian Competition and Consumer Commission.

The conduct occurred between January and September 2011 through an extensive advertising campaign.

The Court also found that its former CEO, Benjamin Polis, contravened the Australian Consumer Law (ACL) through his role as the voice-over in the radio advertisements.

Justice Marshall found that 80 Energy Watch advertisements misled consumers in contravention of sections 18(1), 29(1) and 34 of the ACL. They comprised of:

  • 8 television advertisements broadcast in Melbourne and/or Brisbane,
  • 9 radio advertisements broadcast in Brisbane,
  • 33 print advertisements in The Age and Herald Sun newspapers,
  • A wrap around to an issue of the AFL Record,
  • Statements made on an Energy Watch website and other websites,
  • 11 billboards in or around Melbourne; and
  • Advertisements on a scoreboard at the MCG during 3 AFL games in the 2011 AFL season.

Justice Marshall described the representations as having been made with a view to ‘entice’ consumers to become customers of Energy Watch.

Energy Watch had represented in its advertising that it compared the rates of all or many of the energy retailers in a person’s area when in fact the service it provided was to compare the rates of a person’s current energy retailer with those of the energy retailers with which Energy Watch has commercial agreements in place (referred to as its preferred suppliers).

Energy Watch had also falsely represented that:

  • It had an adequate basis to claim that it had saved residential customers $386 and business customers $1,878 in the 12 months following switching their energy retailer through Energy Watch;
  • It would save residential and business customers those amounts in the 12 months following switching their energy retailer through Energy Watch.

“Energy Watch blatantly misled consumers about the service it provides and the savings they could obtain, as Energy Watch was earning commissions from its preferred suppliers for each customer who switched to them using the Energy Watch service,” ACCC chairman Rod Sims said.

“Both residential and business energy users are increasingly sensitive about the cost of gas and electricity and are looking to reduce their cost. To take advantage of these consumers by misleading them in this manner is deplorable.”

“The ACCC will continue to work towards ensuring providers of energy price comparison services such as that provided by Energy Watch meet their obligations under the law and do not mislead consumers.”

A further directions hearing has been scheduled for Friday 25 May 2012 at 9am. The relief being sought by the ACCC includes declarations, injunctions, corrective advertising, civil penalties and costs. Civil penalties for corporations are up to $1.1 million and for individuals up to $220,000 for each contravention.