The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Multimedia International Services Pty Ltd, trading as The Community Network, for allegedly engaging in unconscionable conduct, making false or misleading representations and wrongly accepting payments from small businesses.

The Community Network sells digital advertising services to small businesses throughout Australia. The advertising is presented on branded LCD screens at various sites such as fitness centres, newsagencies, and shopping centres.

The ACCC alleges that The Community Network engaged in unconscionable conduct in its dealings with two small businesses, including by refusing to release them from contracts for advertising services when The Community Network was not providing those advertising services, then pursuing them for non-payment, threatening legal action and, in one case, engaging debt collectors.

The ACCC also alleges that The Community Network expressly or impliedly made false or misleading representations to small businesses that the key contract terms were disclosed on the front of the contract, that the contract was for a fixed 2 year term when that was not the case unless the business gave 12 months written notice by registered post, and that the location was as set out on the front of the contract, when terms in fine print on the reverse side allowed The Community Network to change the location unilaterally.

It is also alleged that The Community Network made false or misleading representations to three small businesses about the location where their advertisements would be shown and the conditions under which that location could be unilaterally changed.  In addition, the ACCC alleges The Community Network wrongly accepted payments from these three small businesses at a time when it had reasonable grounds to believe it would not be able to provide the services at the specific location within a reasonable time.

“Unconscionable conduct which affects small businesses is a current enforcement priority for the ACCC,” ACCC Deputy Chair Dr Michael Schaper said.

“In these proceedings we allege that in all the circumstances The Community Network’s conduct was unconscionable in relation to two small businesses, when it did not supply contracted advertising services but continued to enforce payment obligations and would not permit termination of the contract by the small businesses.”

“The ACCC also alleges that The Community Network made false or misleading representations about the terms of the agreements it made with three small businesses.  In any contract with small businesses, the terms and conditions must be fully disclosed, particularly those which are onerous, such as terms restricting the small business from terminating the contract or automatically rolling over the contract for a substantial period,” Dr Schaper said.

“Businesses should also be aware that they must not accept payment for goods or services from other businesses, if they are aware or ought to be aware that there are reasonable grounds for believing that  they will not be able to supply them in a timely manner, or at all.  This is a breach of the Australian Consumer Law and may attract substantial penalties,” Dr Schaper said.

The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.