October 3, 2017

If it’s too good to be true… it could cost you.

Consumer Affairs Victoria v GibsonImage via today.com

Consumer Affairs Victoria v Gibson

The Federal Court has handed down its decision on penalties against Belle Gibson.

Ms Gibson rose to fame (and infamy) surrounding promotions of her book and mobile app titled The Whole Pantry, wherein she claimed to have beaten cancer through diet and alternative therapies after rejecting conventional cancer treatment.

The App and Book, published in August 2013 and November 2014 respectively, netted Gibson and her related company estimated sales of over $1 million, along with breakfast TV slots, current affairs coverage, magazine articles, social media stardom and charity fundraisers.

However, the claims turned out to be too good to be true.

After cracks began to appear in Gibson’s cancer story, and allegations surfaced that little, if anything, from the charity promotions, had actually been donated, Consumer Affairs Victoria (CAV) commenced proceedings against Ms Gibson and her company for misleading and deceptive conduct.

In March 2017, Gibson and her related company (now in liquidation) were found to have engaged in misleading and deceptive conduct in breach the Australian Consumer Law and its counterpart Victorian legislation.

It was held that Gibson and her company had made false or misleading representations in relation to claims about Gibson having cancer and the treatments she underwent, along with multiple false or misleading representations that certain sales proceeds would be donated to various charities.

The Court found that, despite the company operating the social media accounts and holding the book publishing contracts with Penguin, Ms Gibson was also liable as the ‘controlling mind’ behind the operation.

In the follow-up judgment, Mortimer J ordered Gibson to pay penalties totalling $410,000 associated with the Australian Consumer Law breaches for false charitable donation claims, plus CAV’s legal costs.

The Court declined to make an adverse publicity order (requiring publication of a corrective notice). However, in a stinging endnote to the judgement, the Court observed that CAV could have sought additional non-monetary orders, including community service orders:

[115] The Court could have been asked to direct Ms Gibson, for example, to perform a service at one or more of the charitable organisations to which she had promised she and her company would give money. The Court could have been asked to direct her to perform a service at one or more institutions caring for people who really do have cancer … And, in a case such as this, it is more likely to have brought home to Ms Gibson the impact of her conduct, and its offensiveness to members of the Australian community who really are struggling with cancer and its effects, whether on themselves, their families or their friends. Most Australians are, in one way or another, touched by cancer as a terrible illness.

Ms Gibson did not appear at the trial hearings, and it remains to be seen whether the penalties imposed by the Court will be paid. Penguin Australia earlier agreed to donate $30,000 to Victoria Consumer Law Fund for its role in publishing the book.

Takeaways

  • False, or misleading and deceptive claims in breach of the law can result in substantial penalties.
  • The Court is not limited to financial penalties, and has a range of other measures it can impose, such as adverse publication orders, and community service orders.
  • Company directors can be personally liable for misleading and deceptive conduct where it is shown that they are the “controlling mind” behind the conduct.

Links

Consumer Affairs Victoria press release
https://www.consumer.vic.gov.au/latest-news/annabelle-gibson-and-inkerman-road-nominees-pty-ltd-court-action

Director of Consumer Affairs Victoria v Gibson [2017] FCA 240 (Liability Judgment)
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2017/240.html

Director of Consumer Affairs Victoria v Gibson (No 3) [2017] FCA 1148 (Penalties Judgment)
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA//2017/1148.html

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