Prominent consumer action network One Big Switch has fallen foul of the Australian Securities and Investments Commission for potentially misleading advertising.
One Big Switch, which has run numerous campaigns in association with News Corp, the publisher of The Advertiser, aims to use consumer power to deliver cheaper services for its network members.
It tries to enlist thousands of people to “switch” en masse from service providers, in order to unlock discounts.
ASIC released a statement today detailing concerns about the network, which was ordered to review its compliance with financial services laws after it was found to be conducting business without an appropriate licence.
“One Big Switch’s 2014 home insurance campaign saw more than 74,000 consumers signed up, however the company did not hold an Australian financial services (AFS) licence. Following ASIC concerns, the company applied for an AFS licence,” ASIC said.
A condition of the licence was that One Big Switch appoint an independent consultant to review its compliance with legislation.
The consultant, Kemp Strang Lawyers, discovered other problems.
Its initial report to ASIC, Kemp Strang “identified that One Big Switch’s advertising of its recent insurance campaigns contained potentially false and misleading statements”.
According to ASIC, the problematic statements included:
- Advertising a “price beat guarantee” without prominent and proximate qualifications to the offer, such as a minimum age requirement, and the need to be switching from a comparable policy.
- Advertising an “average 30% saving on life insurance”, when the pricing of this product depend very much on the health and lifestyle of the individual applicant.
- Advertising car insurance with an email titled “Could you save $600, and lock it in for 2 years?” when that saving was not necessarily representative of the savings that could generally be achieved.
ASIC said One Big Switch had “agreed to improve its compliance with ASIC’s guidance on advertising, including ensuring ads do not contain misleading statements, and any claims made are appropriately qualified”.
Kemp Strang Lawyers will conduct another review of One Big Switch and report to ASIC by the end of September this year.
“In a time when household budgets are tight, offers of group discounts can be attractive to consumers,” said ASIC deputy chairman Peter Kell.
“ASIC wants to ensure those making the claims are appropriately licensed and complying with important consumer safeguards.
‘ASIC will not tolerate promoters’ failure to comply with the law.”
– InDaily
