International co-operation between the Commerce Commission and its Australian counterpart, the Australian Competition and Consumer Commission (ACCC), has resulted in the successful court action against an ex-New Zealander for breaching the Australian Trade Practices Act 1974. Following admissions by Gold Coast businessman, Robert James Price, the Federal Court in Brisbane has found that he misled consumers and, in one instance, acted unconscionably in connection with the marketing and sale of horse betting software in Australia and New Zealand.

Commission Director of Fair Trading Deborah Battell welcomed the news, which closes a lengthy investigation by the ACCC that included significant assistance by the Commerce Commission.

"This is cross-border co-operation working at its best. We overcame jurisdiction limitations and worked with our Australian counterparts to achieve a good outcome," said Ms Battell.

"Both the Commission and the ACCC were investigating the activities of Australian based Price and his companies. We liased with the ACCC on its investigation, and provided some additional information, which included affidavits from several New Zealand consumers."

The Commission first became aware of Price and his company Offtrack Investments Limited, in May 2000. The Commission received information from consumers who had paid $9,700 for the software and were concerned that it was not working as promoted. The product had been advertised in New Zealand newspapers.

"The Commission opened an investigation, which revealed Offtrack was registered in Australia and one of three companies operated by Mr Price. The Commission formally warned Price that his company was at risk of breaching the Fair Trading Act and then advised the ACCC¦s Consumer Protection department of its investigation. The Commission asked the ACCC to include the New Zealand consumers in their investigation which they subsequently did."

The ACCC came back to the Commission in October 2001 requesting affidavits from a number of New Zealanders. Seven of the 15 witnesses that formed the ACCC's final case were New Zealanders.

In addition to granting permanent injunctions against the company formerly known as Offtrack Investments, the Court ordered extensive corrective advertising both in Australia and New Zealand, and also financial payments to the ACCC.

"The ACCC has advised it will distribute the monies to consumers rather than offset some of its own costs. In doing so, partial refunds will be made to the 15 witnesses in Australia and New Zealand who provided affidavits to the ACCC," said Ms Battell.

She added the need to exercise caution when considering getting involved with these types of computer programmes, especially in the area of horse racing and share trading.

"In this case, extravagant claims were made about the type of lifestyles these programmes can create, using examples of luxury holidays and homes. The standard response applies ¡V if it sounds too good to be true, then it probably is."

Ms Battell confirmed that the Commission is monitoring the promotion of similar programmes. Last year it issued a warning to Auckland based Connaught Limited for alleged false and misleading statements about the success of its computer share charting programme.

Background The Australian Competition and Consumer Commission alleged the software, which was marketed under names such as "Autotab", "Offtrack" and "Solutions Software" by companies that metamorphosed at regular intervals, falsely claimed to be able to predict horse-race place-getters with high accuracy. Purchasers paid up to $12,500 for a copy of the program, having been told they could use it to earn up to $8,000 per month and realise the lifestyle of their dreams.

The companies included Solutions Software International Pty Ltd and the companies formerly known as Acepark Pty Ltd and Offtrack Investments Pty Ltd. Although not all of the companies were parties to the proceedings, the Court found that Mr Price was knowingly concerned in contraventions of the Trade Practices Act 1974 by five companies.

The ACCC alleged the program claimed to follow and analyse the fluctuations of dividends paid and track money bet on horse races. It allegedly highlighted 'smart money' (money placed by professional punters at the last minute) and recommended runners to be backed.

With increasing globalisation and conduct occurring internationally, the ACCC relied on assistance from the Commerce Commission to achieve an effective outcome for both Australian and New Zealand consumers.

The Court's findings included that, contrary to what purchasers were told, the program was a gambling program (and not an investment program), did not have a strike rate of success of between 70 and 95 per cent, and there were no reasonable grounds for representing that purchasers could expect to earn income or profit using the program. In late 2001 the ACCC obtained interlocutory injunctions to stop the offending claims being made pending final orders from the Court.

The Court also found that Acepark Pty Ltd, through Mr Price himself, acted unconscionably by requiring one consumer to sign a waiver as a condition of being refunded the amount paid for the program, following a court-enforceable undertaking given to the ACCC in 1999. The waiver purported to make the payment a full and final settlement, whereas the undertaking required the company to also compensate the consumer for amounts lost while attempting to operate the program. Mr Price was fully aware of the consumer's situation in that she had limited money and had bought the program so she could work at home while caring for her terminally ill partner.

The Court ordered, by consent, that Mr Price and two of his former colleagues, Ronald James Curtin and William Greig Millar, be permanently restrained from being in any way involved in representing, in connection with the marketing and sale of the program, or any substantially similar program, that:

  • the program and/or the company marketing the program has sponsorship, approval or affiliation with any TAB services throughout Australia;
  • that purchasers can reasonably expect to earn certain amounts of income and profit by operating the program;
  • the program has an average strike rate or success rate ratio of 70 to 95 percent in respect of selecting successful place bets;
  • it is necessary that potential purchasers purchase the program urgently, to avoid imminent price increases;
  • the program is an investment program, not a gambling or punting system and involves minimal risk;
  • the number of people who purchase the program will not render the program less effective.

The Court also made declarations, findings of fact and granted permanent injunctions against Solutions Software International Pty Ltd and the companies formerly known as Acepark Pty Ltd and Offtrack Investments Pty Ltd.

Mr Price was ordered to publish prominent corrective advertisements in Australian and New Zealand newspapers. He and Mr Curtin were also ordered to make financial payments to the ACCC, which the ACCC expects will provide for partial refunds to purchasers named in the proceedings. Mr Millar undertook to perform community service work with a gambling assistance charity on the Gold Coast in lieu of any financial contribution. Mr Curtin and Mr Millar were both ordered to attend trade practices compliance training.

Further information is available on the ACCC’s website, http://www.accc.gov.au/

In addition, information about compute share programmes can be found at the following website sites: Australian Securities and Investment Commission ¡V www.watchdog.asic.gov.au

Federal Trade Commission www.ftc.gov