Penalties for fake testimonials and false refund promises

07 October 2020

The Australian Competition & Consumer Commission (ACCC) has issued two infringement notices to Flight Plan Digital Pty Ltd, trading as Live Life Alarms (Live Life Alarms), for alleged false or misleading representations made on its website.1

The $25,200 infringement notices relate to representations on the Live Life Alarms website regarding:

  1. Publication of a “fake testimonial”;2 and
  2. Customers who exercised their rights under its “14 day money back guarantee”.3

An infringement notice may be issued when the ACCC has reasonable grounds to believe a business has contravened certain consumer protection laws, and payment of an infringement notice is not an admission of a contravention of the Australian Consumer Law (ACL).4

Fake testimonial

It is alleged that Live Life Alarms posted a “fake testimonial” on its website in breach of section 29(1)(e) of the ACL.5

Section 29(1)(e) of the ACL says:

A person must not … make a false or misleading representation that purports to be a testimonial by any person relating to goods or services.6

The testimonial on the Live Life Alarms website purported to be related to Live Life Alarms.7 In fact, the testimonial related to a competitor’s product.8

ACCC Commissioner Sarah Court said that “[t]his alleged conduct was of particular concern to the ACCC as it may have influenced potentially vulnerable consumers to purchase a personal alarm from Live Life Alarms”.9

14 day money back guarantee

Live Life Alarms allegedly made false or misleading representations regarding their “14-day money back guarantee” in breach of section 29(1)(m) of the ACL.10

Section 29(1)(m) of the ACL says:

A person must not … make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3 2);11

The ACCC alleges that the Live Life Alarm’s “14 day money back guarantee” falsely promised that customers would be refunded the full purchase price if they were not satisfied with their purchase.12

However, the ACCC stated that when providing refunds under this guarantee, Live Life Alarms deducted almost 20 per cent from the original purchase price for postage, packing, credit card transaction fees and other set-up costs and fees.13

Live Life Alarms no longer deducts any amount when providing refunds under its refund policy, and it has removed the testimonial from its website.14

Lessons for businesses

Ms Court warned that “[t]he penalties paid by Live Life Alarms should serve as a warning to businesses that it is unacceptable to mislead consumers about purported testimonials or reviews of their business, or to make false promises about money back guarantees.”15

If a business does intend to provide statements from customers or clients it should it should ensure that they are genuine testimonials that will not mislead customers.

Businesses must also ensure that any money-back guarantee is not false or misleading. If a business has a money-back guarantee, the business must be able to provide that money back guarantee, without set off or deduction. Businesses must be transparent with customers and clearly set out any exclusions or deductions in relation to their refund or returns policies, especially if a business intends to deduct or set off costs. If there is any uncertainty businesses should seek legal advice to ensure compliance with the ACL.


Failure to comply with the ACL may result in penalties such as those infringement notices issued in this matter. An infringement notice may be issued for each breach of the ACL. The maximum of an infringement notice is:16

  • $133,200 for a listed corporation;
  • $13,320 for a body corporate other than a listed corporation; or
  • $2,664 for a person that is not a body corporate (including individuals).

The ACCC may also initiate legal action where, having regard to all the circumstances, it considers litigation to be the most appropriate way to achieve the compliance objectives.17 In these circumstances the court may order significantly higher penalties.18

For example, we previously wrote an article about Oscar Wylee’s alleged breaches of the ACL which resulted in the Federal Court ordering Oscar Wylee to pay $3.5 million in penalties.

The maximum penalty for an individual that has made false or misleading representations under the ACL is $500,000.19 For corporations however, the penalty for making false or misleading representations under the ACL will be the greater of:20

  • $10,000,000;
  • Three times the value of the benefit received; or
  • 10% of annual turnover in preceding 12 months of offence, if court cannot determine benefit obtained from the offence.

This article was written by Teresa Torcasio, Partner and Ruth Trevenen-Williams, Solicitor.

7. Competition and Consumer Act 2010 (Cth), sch 2, s 29(1)(e)
11. Competition and Consumer Act 2010 (Cth), sch 2, s 29(1)(m)
16. Competition and Consumer Act 2010 (Cth), s 134C
18. Competition and Consumer Act 2010 (Cth), sch 2, s 151
19. Competition and Consumer Act 2010 (Cth), sch 2, s 151
20. Competition and Consumer Act 2010 (Cth), sch 2, s 151

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