In Australian Securities & Investments Commission v Malouf Group Enterprises Pty Ltd [2018] FCA 808 the Federal Court found that credit repair business Malouf Group Enterprises Pty Ltd (Malouf Group) and its director Jordan Francis Malouf breached the Australian Consumer Law during the period 1 January 2014 to 31 December 2015 by making false and misleading representations and by engaging in unconscionable conduct.

The Court ordered Malouf Group to pay a pecuniary penalty of $400,000, and Mr Malouf $100,000 as well as ASIC’s costs. In determining the penalties, Justice Derrington took into account an Enforceable Undertaking in which the Malouf Group will refund a total of $1.1 million to consumers who did not have any negative listings on their credit files when they entered into contracts with Malouf Group during the 2014-2015 period. Further, the penalties imposed were towards, or at, the upper end of the limit of the financial resources available to the Malouf Group.

Justice Derrington declared Malouf Group’s system of selling credit repair services to consumers between at least 1 January 2014 and 31 December 2015 was unconscionable, in circumstances where:

(a) it targeted its services towards consumers who were vulnerable;

(b) it created, or approved the creation of, the content of the TV advertisements, sponsored link advertising and website advertising used to advertise its services;

(c) it utilised the TV advertisements, the sponsored link advertising, and the website advertising as conduits to the Telephone Sales Calls;

(d) it remunerated MGE sales representatives in whole or part by commission;

(e) its scripts and advertising were misleading

f) it used unfair tactics.

The Court also declared that false representations were made by Malouf Group:

(a) by stating on the Credit Clean Australia website that it was “Voted Australia’s No 1 Credit Repairs Solution Company”;

(b) by stating on the Credit Wash website that it was “Voted Australia’s No 1 Credit Repairs Solution Company”;

(c) by stating on the Clean Your Credit website “Find Out today why we are voted Australia’s no 1 credit repair solutions company”;

(d) by stating on the Credit Fix Australia website that it was “Voted Australia’s First Choice for a Second Chance”

Malouf Group also published false testimonials in its website.