Australian Competition and Consumer Commission v Star Promotions Club Pty Ltd [2010] FCA 139

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Star Promotions Club Pty Ltd [2010] FCA 139 Citation: Australian Competition and Consumer Commission v Star Promotions Club Pty Ltd [2010] FCA 139

Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v STAR PROMOTIONS CLUB PTY LTD

File number: NSD 760 of 2009

Judge: RARES J

Date of judgment: 4 March 2010

Date of hearing: 12 February 2010

Place: Sydney

Division: GENERAL DIVISION

Category: No catchwords

Number of paragraphs: 41

Counsel for the Applicant: Dr R Higgins

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr B Katekar

Solicitor for the Respondent: Axis Legal Pty Limited

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION NSD 760 of 2009

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: STAR PROMOTIONS CLUB PTY LTD

Respondent

JUDGE: RARES J

DATE OF ORDER: 4 MARCH 2010

WHERE MADE: SYDNEY

THE COURT DECLARES THAT:

1 The Respondent (Star Promotions), while engaged in trade or commerce, contravened s 52 of the Act by causing to be published between 1 September 2008 and 27 February 2009 a scratch card promoting subscription-based mobile telephone premium content services (Content Services) (the First Scratch Card) which represented that: 1.1 a consumer was lucky if scratching the latex panels on one of the First Scratch Cards revealed three matching symbols; and 1.2 if a consumer scratched the latex panels on one of the First Scratch Cards and was lucky in scratching the latex panels to reveal three matching symbols, then the consumer, using any mobile telephone handset, need only text a code to a telephone number at a cost of $0.25 and they would become eligible to win a valuable prize, when in fact, 1.3 a consumer was not lucky if scratching the latex panels on one of the First Scratch Cards revealed three matching symbols as each of the First Scratch Cards had three matching symbols which apparently entitled the consumer to claim a valuable prize by sending an SMS message to a telephone number revealed on the First Scratch Card; and 1.4 to see if they had won a prize or what they had won and to receive details as to how to claim their prize, a consumer first had to subscribe to a Content Service (the Star Promotions Content Service) which subscription required the consumer to: 1.4.1 send an SMS message at a cost of $0.25; 1.4.2 pay a flat fee of $6.60 immediately upon subscribing; 1.4.3 pay a weekly fee of $6.60 from the first Friday after the date of subscription unless the consumer unsubscribed from the Star Promotions Content Service, which could be done at any time; and 1.4.4 have, and be using, a mobile telephone handset with specific functionality; and 1.5 only after a consumer had subscribed to the Star Promotions Content Service would the consumer be sent details as to whether or not they had won a prize and, if so, how they could claim their prize which involved sending correspondence by Australia Post to Star Promotions. 2 Star Promotions, while engaged in trade or commerce, contravened s 52 of the Act by causing to be published between 10 November 2008 and 23 August 2009 a second scratch card promoting Content Services (the Second Scratch Card) which represented that: 2.1 a consumer was lucky if scratching the latex panels on one of the Second Scratch Cards revealed three matching symbols; 2.2 if a consumer scratched the latex panels on one of the Second Scratch Cards and was lucky in scratching the latex panels to reveal three matching symbols, then the consumer, using any mobile telephone handset, need only text a code to a telephone number at a cost of $0.25 and they would be able to claim a valuable prize; and 2.3 a 'lifestyle voucher' constituted a valuable prize and had a value of approximately $80, when in fact, 2.4 a consumer was not lucky if scratching the latex panels on one of the Second Scratch Cards revealed three matching symbols as each of the Second Scratch Cards had three matching symbols which apparently entitled the consumer to claim a valuable prize by sending an SMS message to a telephone number revealed on the Second Scratch Card; and 2.5 to see if they had won a prize or what they had won and to receive details as to how to claim their prize, a consumer first had to subscribe to the Star Promotions Content Service which subscription required the consumer to: 2.5.1 send an SMS message at a cost of $0.25; 2.5.2 pay a flat fee of $6.60 immediately upon subscribing; 2.5.3 pay a weekly fee of $6.60 from the first Friday after the date of subscription unless the consumer unsubscribed from the Star Promotions Content Service, which could be done at any time; and 2.5.4 have, and be using, a mobile telephone handset with specific functionality; 2.6. only after a consumer had subscribed to the Star Promotions Content Service would the consumer be sent details as to whether or not they had won a prize and, if so, how they could claim their prize which involved sending correspondence by Australia Post to Star Promotions; and 2.7 a 'lifestyle voucher' may not constitute either a prize or a valuable prize as the value of a 'lifestyle voucher' may be contingent upon the consumer spending money and, in most cases, unless the consumer did in fact spend money, the 'lifestyle voucher' had no value. 3 By causing the First Scratch Card to be published between 1 September 2008 and 27 February 2009, and the Second Scratch Card to be published between 10 November 2008 and 23 August 2009, in connexion with the supply and promotion, or possible supply and promotion of Content Services, Star Promotions, while engaged in trade or commerce, contravened s 53(e) of the Act by making false or misleading representations with respect to the price and subscription nature of the Content Services being advertised, by representing that the consumer need only text a code to a telephone number at a cost of $0.25 and they would become eligible to win a valuable prize, when in fact sending such a text message would subscribe the consumer to the Star Promotions Content Service, for which the consumer would be charged a $6.60 flat fee, plus a weekly fee of $6.60 (from the first Friday after subscription) unless the consumer unsubscribed from the service. 4 By causing the First Scratch Card to be published between September 2008 and 27 February 2009, and the Second Scratch Card to be published between 10 November 2008 and 23 August 2009 in connexion with the supply and promotion, or possible supply and promotion of Content Services, Star Promotions, while engaged in trade or commerce, contravened s53(g) of the Act by making a false or misleading representation concerning the effect of the condition for consumers to be using a Wireless Access Protocol (WAP) enabled mobile telephone to send a text message when, in fact, such a telephone was necessary to access Star Promotions' content services to which the consumer would have to subscribe. THE COURT ORDERS BY CONSENT THAT: 5 Star Promotions be restrained for a period of five years from the date of these orders, whether by itself, its servants, agents or otherwise howsoever, from, in trade or commerce, in connection with: 5.1 the supply or possible supply of subscription-based mobile telephone premium content services (Content Services); or 5.2 the promotion by any means of the supply or use of Content Services, making representations to the effect that a consumer is lucky enough to have won or to have become eligible to claim a prize in a lottery-style game in circumstances where every participating consumer wins a prize or is entitled to claim a prize, without clearly and prominently stating that: 5.3 in order to find out: (a) if they have won and/or (b) how to claim a prize, a consumer must first subscribe to the Content Service, if that be the case; 5.4 all of the actual charges that a consumer will incur in: (a) finding out if they have won; and/or (b) claiming a prize, 5.5 the terms and conditions (including as to price) pursuant to which Content Services will be provided and a prize offered. 6 Star Promotions be restrained for a period of five years from the date of these orders, whether by itself, its servants, agents or otherwise howsoever, from, in trade or commerce, in connection with: 6.1 the supply or possible supply of subscription-based mobile telephone premium content services (Content Services); or 6.2. with the promotion by any means of the supply or use of Content Services, making representations to the effect that: 6.3 a consumer is lucky to have won a valuable prize in a lottery-style game in circumstances where the game is not truly one of chance; and 6.4 a consumer has the opportunity to win a valuable prize in a lottery-style game without stating the true nature of the prizes that the consumer has the opportunity to win by participating in the lottery-style game. 7 Star Promotions publish by SMS message in the form annexed and marked 'A', sent within three (3) months of the date of this order, to all current subscribers to the Star Promotions Content Service who subscribed to the Star Promotions Content Service in response to the First or Second Scratch Card promotion, a message which brings any declaration made by the Court to the attention of those subscribers and informs those subscribers as to the steps they can take to resolve any complaint they may have. 8 Star Promotions: 8.1 within 90 days publishes in all publications in which the First and Second Scratch Cards were inserted, an advertisement : 8.1.1 in the form annexed and marked 'B'; 8.1.2 in the case of the advertisements published in newspapers, in the right hand corner of page 3; and 8.1.3 in the case of the advertisements published in magazines, within the first 6 pages of the magazine; and 8.2 provide the Applicant (the ACCC) with evidence of publication of the advertisements within 7 days of its publication. 9 Star Promotions pay the ACCC's costs in the amount of $20,000. Annexure A Form of SMS message (155 characters) FreeMsg Star Promotions Club scratch card promotion found misleading Court action taken by ACCC Complaints? Call 1300xxxxxx or your telco provider