Background

Earlier this year, the ACCC commenced proceedings against the national eyewear retailer, alleging that it had misled its consumers about its charitable initiatives. To find out more about the allegations, as a precursor to this article, please read our short article "Not seeing through its charitable promises? The ACCC takes national eyewear retailer to court", published earlier this year.

Despite initially denying the allegations, three weeks before the scheduled hearing, the parties had reached an agreement meaning that the ACCC's application would no longer run contested. Oscar Wylee accepted liability, resulting in an agreement as to the facts and joint submissions were made, including on Oscar Wylee's conduct and orders on pecuniary penalties.

The admitted contraventions

Katzmann J of the Federal Court found that between the period of 13 January 2014 and 31 December 2018 (the Relevant Period), Oscar Wylee had breached sections 18, 29(1)(h) and 33 and of the ACL by engaging in the following conduct.

Pair for a Pair Representations

Oscar Wylee represented in multiple ways that for each pair of glasses purchased, it would donate an additional pair of glasses to someone in need (Pair for a Pair Representations). The Court found that this was a "deliberate marketing choice" and was a "substantive feature of the Oscar Wylee website and its marketing" during the Relevant Period.

However, Oscar Wylee failed to meet its 'pair for a pair' promise as it sold 328,010 glasses, but only donated 3,181 frames (that is, without prescription lenses). It was only until after the Relevant Period that Oscar Wylee started to make substantial donations, as in 2019, 333,404 frames were donated to charities and other organisations, and $80,000 was donated to charitable causes.

Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

• misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
• liable to mislead the public as to the quantity of the goods being donated (s 33 of the ACL).

Rose Charities Representations

Oscar Wylee represented in multiple ways that it was closely affiliated, and had "partnered", with Cambodian charitable organisation, Rose Charities (Rose Charities Representations). However, only $2,000.00 and 100 pairs of frames (again, without prescription lenses) had been donated to Rose Charities, and those donations had ceased entirely by the end of 2014.

By at least June 2013, a director of Oscar Wylee was aware that some of Oscar Wylee's marketing contained inaccurate images and information in respect of its charitable donations and affiliations.

Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

• misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
• false or misleading to the public as to a particular affiliation (s 29(1)(h) of the ACL).

Katzmann J accepted and described Oscar Wylee's admissions as "well-founded".

The orders

In assessing the proposed agreed orders, Katzmann J accounted for the fact that Oscar Wylee had not previously contravened the ACL, they were co-operative with the ACCC during the investigation, and also noted that the charitable donations they made in 2019.

However, notwithstanding Oscar Wylee's cooperation and belated donations, Katzmann J took the appropriate opportunity to describe Oscar Wylee's conduct:

• "Oscar Wylee improperly exploited the good nature of consumers to its advantage by contriving to enhance the value of its brand by falsely associating it with altruistic pursuits";
• "Its conduct was a betrayal of that promise".

A summary of some of the key orders is as follows.

Pecuniary relief

The parties jointly submitted that Oscar Wylee pay $3.5million in pecuniary penalties under s 224(1) of the ACL, which comprised of:

• $2,100,000 in respect of the Pair for Pair Representations for contravening s 33 of the ACL; and
• $1,400,000 in respect of the Rose Charities Representations for contravening s 29(1)(h) of the ACL.

In reaching that number, the parties had accounted for the multiple contraventions of s 29(1)(h) and s 33 through various platforms (i.e. website, social media, direct emails to consumer, and promotional merchandise) when forming the figure.

Katzmann J accepted the "accuracy of the parties' agreement" and that the total amount was "just and appropriate" to deter Oscar Wylee from re-offending and others from following suit.

Corrective notice

Oscar Wylee was also ordered under s 246(2)(d) of the ACL to publish a clearly visible corrective notice on its primary forms of online marketing, being the homepage of its website, Facebook and Instagram pages, for a period of at least 30 days.

Compliance training

In relation to the ongoing competition and consumer compliance training, the Katzmann J ordered under s 246(2)(b) that Oscar Wylee must, for a period of three years and at its own expense, have its existing ACL compliance program reviewed annually by an independent expert in the field of competition and consumer law. It is required that the independent expert:

• not be involved in designing or implementing Oscar Wylee ACL compliance programs;
• was never employed by or a director of Oscar Wylee;
• had never consulted Oscar Wylee in any matters relating to competition or consumer law other than conducting the review required by Katzmann J's orders;
• has no significant shareholding or other interest in Oscar Wylee.

Within one month after the completion of each review, Oscar Wylee must ensure that any changes considered necessary by the expert are implemented, and that the ACCC are notified in writing identifying the changes and confirming that they have been made.

Costs

Katzmann J accepted the order that Oscar Wylee contribute $30,000 to the ACCC's costs of the proceedings, on the basis that its cooperation justified the discount.

Key takeaways

• This case serves as an important warning to businesses that any claims regarding philanthropic efforts in marketing material (including on social media and online marketing) need to be able to be substantiated to avoid contraventions of the ACL.  You can get 'ahead of the curve' by making detailed and contemporaneous records of your timely donations.
• Backtracking on your charitable promises won't get you out of trouble. Ensure your donations are made as promised, and in a timely manner.
• Carefully consider how the public may reasonably construe your charitable promise. It is best practice to make the public clearly aware of the terms of all promotions, not just your charitable promises. In relation to its Pair for Pair Representations, Oscar Wylee should have clearly explained to the public that frames without prescription lenses would be donated and adjusted the marketing of its promotion accordingly.
• As described in our earlier article, the ACCC have wide-spanning information gathering powers through its s 155 notice, which it may have deployed to obtain the information from Oscar Wylee giving rise to these proceedings. Head to our article "Facing the music of the ACCC's section 155 notice" to read more about the tool.

The Litigation and Dispute Resolution group at McCabe Curwood have conducted competition and consumer law training programs with businesses of different sizes and operate within varied industries. We have also been engaged to facilitate an ACL compliance program, as part of a Federal Court judgment. Feel free to get in touch with us to find out more about our competition and consumer law offering.