The Meerkat Market – it’s all cute and cuddly to some, false and misleading to others……

After being issued with an ACCC infringement notice for an alleged false or misleading representation in its health insurance advertising, Compare the Market Pty Ltd has paid a fixed penalty of $10,200 and withdrawn the relevant marketing material.

The penalty represents yet another success for the ACCC in its oft stated priority area of the ‘online marketplace’, with a focus on comparator websites.  It follows recent ACCC action against Scoopon and Spreets for online activities.

In the meerkat case, Compare the Market Pty Ltd distributed pamphlets in parts of Australia earlier this year in which it claimed:

‘We now compare more health funds than any other website in Australia’

and

‘Compare more health funds than anywhere else’.

The same or similar representations were also made on its website, flyers, banner advertising, on TV infomercials and in its office foyer.

Unfortunately for Alexsandr Orlov (the meerkat), the ACCC noted that there were two other websites that compared more health insurance funds than Compare the Market Pty Ltd, including the website operated by the Private Health Insurance Ombudsman. The Ombudsman’s website permits consumers to compare up-to-date health insurance policies from every health insurance provider in Australia.

This and related matters are a reminder to businesses making comparison representations that:

• businesses must ensure that the comparison representation is not only accurate on day one, but that it continues to be accurate for as long as the representation is made
• businesses need to ensure they undertake sufficiently thorough due diligence and monitoring as the comparison representation needs to be accurate – an innocent mistake in this area will not excuse a business – if a representation is misleading, then it’s misleading;
• if sufficient due diligence and monitoring are not practical, businesses should consider whether to adopt a different marketing message;
• businesses should retain evidence of comparison data arising from both the initial due diligence and the ongoing monitoring; and
• the ACCC is continuing to focus on those doing business in the online marketplace, therefore businesses doing business online need to be extra vigilant about ensuring they don’t mislead – although the fine was low in this instance, businesses should not turn a blind eye to the risk as penalties can be much higher, and have in fact been much higher in other cases.

It is becoming more common for businesses to have proposed advertisements checked and reviewed from the perspective of the risk of misleading conduct, but businesses need to go beyond this and consider and review all types of and places where the company makes representations.