Employsure Complaints Upheld24 August 2021
The initial ACCC case against Employsure in 2020 failed because Justice Griffiths found the ACCC did not establish any of five alleged causes of action that encompassed unconscionable conduct and "entangling" businesses in its "marketing web".
However, the full court found Justice Griffiths attributed to the ordinary or reasonable business owner "too high a level of shrewdness or wariness, digital literacy, and/or commercial sophistication" and assumed more attention or scrutiny than they were likely to give to the advertisements.
He also wrongly conceived that business owners' only reasonable reaction to the advertisements would be to perceive them as privately provided employment-related advice not associated with any government agency, the full court said.
But the full court said business owners with employees "encompasses a wide cross-section of the public" and the majority of Employsure’s customers are small, while those with less than five employees will "include, for example, tradesmen and women, corner stores, small hairdressing salons and barbershops, small shops and cafes, and small courier businesses".
The bench did "not accept that running such a business necessarily requires that the owner be intelligent or shrewd, have a high level of acumen, be digitally literate or commercially sophisticated, or have any amount" of experience, particularly given the ads "were not published only to business owners who ran their businesses well".
It said the ads were "intended to be seen and read by a wide range of business owners, including those who are intelligent or shrewd and those who are gullible; the wary and the unwary; those who are well educated and those who are not; those who have a good facility in English and those who do not; those who are experienced in running business and those who have less or no prior experience; and those who are digitally competent or commercially sophisticated and those who are not".
"An advertisement may be misleading even if it fails to deceive the intelligent, the shrewd, the wary, the well-educated, the experienced, the digitally competent or commercially sophisticated."
The full court said Justice Griffiths "erred in failing to recognise the effectiveness of Employsure’s marketing strategy in relation to the presentation of information in the Google Ads".
It said he came to the wrong conclusion about the "level of attention and scrutiny that an ordinary and reasonable business owner taking reasonable care" of their interests would give to the advertisements, noting many "might be described as the urgent category" needing immediate help.
As its Google Ads appeared at the top of the list of search results, used headlines like "Fair Work Ombudsman Help - Free 24/7 Employer Advice", a fairworkhelp.com.au URL and until 2019 did not mention Employsure's business name, the full court said the judge failed to recognise a reasonable owner might give it "only perfunctory attention" and take in "only its general thrust".
Nor did the judge properly consider the "higher a website features in the search result, the more likely it is that it will be selected by consumer" or the fact the help or advice was free "was likely to support the impression" the government agency named in the headline would provide it.
"It would not be an unreasonable or extreme reaction for an ordinary or reasonable business owner to have understood that commercial organisations mostly do not offer free help or advice whereas government agencies regularly do so," it said.
The full court found Employsure's conduct misleading or deceptive or likely to be so in contravention of s18 of the Australian Consumer Law and each ad "conveyed a representation which was false or misleading" in breach of s29(1)(b) and (h).
The full court remitted the matter to Justice Griffiths for a hearing on declarations and penalties, with Employsure to pay the ACCC's costs of the appeal.
ACCC deputy chair Mick Keogh said the consumer watchdog "took this action after receiving over 100 complaints relating to Employsure, including from small businesses who had contacted Employsure after viewing a Google Ad and thought they were dealing with a government agency".