Oscar Wylee fined $3.5 million for breaches of Australian Consumer Law
- 18 September, 2020 13:38
Oscar Wylee has been fined $3.5 million after being found guilty of misleading and deceptive conduct and making false marketing representations around its charitable donations and affiliation strategy.
In the Federal Court today, the eyewear retailer was ordered to pay $3.5 million in penalties for breaches of Australian Consumer Law. These relate to false marketing claims that for every pair of glasses a consumer purchased, the company donated a pair of glasses to someone in need.
Instead, the company was found to have donated just 3181 pairs of frames to charity without lenses between 2014 and 2018, against sales of 328,010 pairs of glasses.
The action against Oscar Wylee was launched by the Australian Competition and Consumer Commission (ACCC) in December, and goes right to the heart of the retailer’s brand statement and mission. At the time, the company told CMO via a statement it “utterly rejected the claims” and would vigorously defend its position.
However, through Federal Court proceedings, Oscar Wylee admitted it made the false statements across its social media, website, promotional merchandise and marketing communications. The company also admitted to making false or misleading representations to consumers between January 2014 and December 2018 that it was closely affiliated with the charitable organisation, Rose Charities.
Despite claims it had partnered with Rose Charities on building sustainable eye care programs in Cambodia and was funding students to become eye surgeons, Oscar Wylee’s association was found to have consisted of a single donation of $2000 and 100 frames in 2014. No further donations or support were provided to Rose Charities, despite Oscar Wylee continuing to claim an affiliation until late 2018.
ACCC deputy chair, Delia Rickard, said the claims Oscar Wylee made around charitable work and donations had given it an unfair advantage in the market.
“Oscar Wylee promoted its charitable activities as a core reason why consumers should buy Oscar Wylee glasses, but its claims were false and made in circumstances where consumers could not easily verify their claims for themselves,” she said.
Oscar Wylee’s behaviour risks diminishing consumer confidence to support other businesses that genuinely engage in philanthropic activities, Rickard continued.
“The misleading conduct also portrayed Oscar Wylee as a socially conscious company that made significant donations of glasses to people in need, which, because this was not true, unfairly differentiated it from other brands in market. At the same time, Oscar Wylee deprived disadvantaged people in need of the benefits it promised in its advertising.”
In her judgment, Justice Katzmann said Oscar Wylee stood to profit from inducing consumers to purchase its products - and still does. She also judged the group's senior management was directly involved in the conduct throughout the referenced period.
“It built its reputation by engaging in the contravening conduct, appealing to socially-conscious consumers who wanted to support charitable causes through their purchasing behaviour. Its conduct was a betrayal of that promise,” the Justice stated. "I was, and remain, troubled, however, by the fact that Oscar Wylee chose not to put on any evidence to explain its behaviour, let alone apologise or identify any measures it may have implemented to guard against a repetition of the contravening conduct.
"Nevertheless, it was agreed Oscar Wylee has now established a compliance program and that the offending representations have been removed from all its media. Moreover, the steps it has taken in mitigation perhaps amount to a more eloquent expression of remorse than a statement to the Court."
Alongside the financial penalty, the company has been ordered to publish information online explaining its breaches of Australian Consumer Law, and pay a $30,000 contribution to the ACCC’s costs. Oscar Wylee admitted liability and made joint submissions consenting to the orders sought.
In its own statement, Oscar Wylee acknowledged the findings and said the orders were made after the Federal Court approved a settlement between the ACCC and the retailer. The company said it “sincerely regrets” its contraventions of consumer law.
“Oscar Wylee has taken corrective action in response to the court action and in line with our ongoing commitment to corporate social responsibility,” the company stated. “We have also adopted a strict Trade Practices Compliance Policy, directed to the protection of consumers, and appointed a compliance officer responsible for its implementation.”
In its statement, Oscar Wylee noted it had since donated a total of 336,585 pairs of glasses frames and made cash donations totalling $80,000 to charities supporting eyecare for the disadvantaged. More than 333,000 of these donations were made between January and December 2019, after the period referenced in the ACCC court proceedings.
In her judgment, Justice Katzmann noted these larger donations came in the same year media outlet, Insight Magazine, reached out to the company on at least three occasions raising queries about the retailer’s charitable donations and affiliates on 16 January, 31 January and 8 February 2019. These led to three articles published by Insight Magazine questioning Oscar Wylee’s philanthropic claims.
Oscar Wylee began operations in 2012 and by 2020 had opened 60 stores.
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