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Employsure ordered to pay $1m penalty

Employsure, a private workplace relations consultancy, has been ordered to pay a pecuniary penalty of $1 million after the Full Federal Court unanimously found that the organisation had made false or misleading representations, through its Google Ads, that it was affiliated with, or endorsed by, a government agency.1

Employsure implemented a marketing strategy that relied upon paid Google Ads, some of which used the ‘dynamic keyword insertion’ feature to advertise its free 24/7 employment-related advice service.

Dynamic keyword insertion dynamically updates the displayed advertisement text to include selected keywords that were included in a searcher’s search terms.2 Employsure selected ‘Fair Work Australia’, ‘Fair Work’ and ‘Fair Work Ombudsman’ as its dynamic keywords, which resulted in Google Ads displaying, amongst other things, ‘Fair Work Ombudsman Help – 24/7 Employer Advice’ and ‘Fair Work Australia – Free Fair Work Advice’.3

The Google Ads were displayed from August 2016 to August 2018.

The Australian Competition and Consumer Commission (ACCC) initiated proceedings in 2018 after it had received over 100 complaints from small businesses and consumers who had contacted Employsure thinking it was a government agency.4

At first instance, the Federal Court dismissed the ACCC’s application, finding that it did not establish that ‘a not insignificant number’ of ordinary or reasonable business owners would infer that Employsure was affiliated with, or endorsed by, a government agency.5

Important to that decision was the court’s finding that the paid Google Ads are distinguishable from organic Google search results and the advertisements included ‘.com’ rather than ‘.gov’.6

On appeal, however, the Full Federal Court found that the Google Ads did convey an affiliation with, or endorsement by, a government agency to an ordinary or reasonable business owner.7

The court determined that the trial judge had erred in relying on the ‘not insignificant number test’, finding that the correct test was whether the impugned conduct or representation, would when “viewed as a whole and in context, have a sufficient tendency to lead a person exposed to the conduct into error”.8

The court concluded that an ordinary or reasonable business owner would infer that Employsure was affiliated with, or endorsed by, a government agency. The following features of Employsure’s Google Ads were salient to the court’s finding:9

  • An ordinary or reasonable business owner would not have read the advertisements closely.
  • The characteristics of an ordinary or reasonable business owner varies, with some being gullible or not well educated or digitally literate, experienced or commercially sophisticated.
  • The use of dynamic keyword insertion and Employsure’s selection of keywords meant that the headline of each Google Ad gave the impression that the help or advice would be provided by that agency.

The ACCC submitted that a pecuniary penalty of $5 million was appropriate to serve as a strong deterrent.10 However, the court imposed a pecuniary penalty of $1 million on the basis that the conduct was not deliberate and it had not previously contravened Australian Consumer Law.11

The Employsure litigation serves as an important reminder to law firms to be cautious when relying on paid Google Ads, or other algorithmic advertisement facilities, to advertise their services, especially where that advertisement may indicate a connection with another agency or entity.

Law firms should determine the relevant class of consumers for their advertising, and carefully consider whether the advertisement, when viewed as a whole and in context, would lead a person of the relevant class to conclude that there was a connection between the law firm and another agency or entity, where one did not exist.

Further, rule 36 of the Australian Solicitors Conduct Rules 2012 (ASCR) states that, “a solicitor … must ensure that any advertising, marketing or promotion in connection with the solicitor or law practice is not … misleading or deceptive or likely to mislead or deceive”. This case indicates that the calculated use of such advertisements may also be a breach of the ASCR.

The importance of the Employsure litigation is highlighted by the recent release of the ACCC’s final report, ‘Digital advertising services inquiry’, which calls for stronger additional powers for the ACCC to address the effect of Google’s dominance in the ad tech industry.12

Yale Hudson-Flux is a graduate intern at Queensland Law Society. This article has been reviewed and approved by Senior Policy Solicitor Kate Brodnik.

Footnotes
1 Australian Competition and Consumer Commission v Employsure Pty Ltd (No.2) [2021] FCAFC 142 [1], [152]; Australian Competition and Consumer Commission v Employsure Pty Ltd (No.2) [2021] FCA 1488 [75].
2 Australian Competition and Consumer Commission v Employsure Pty Ltd (No.2) [2021] FCAFC 142 [46].
3 Ibid [2], [49] – [63].
4 See ACCC media release.
5 Australian Competition and Consumer Commission v Employsure [2020] FCA 1409 [282].
6 Ibid [273] – [282].
7 Australian Competition and Consumer Commission v Employsure Pty Ltd (No.2) [2021] FCAFC 142 [152].
8 Ibid [185].
9 Ibid [152] – [160].
10 Australian Competition and Consumer Commission v Employsure Pty Ltd (No.2) [2021] FCA 1488 [10].
11 Ibid [75] – [122].
12 See ACCC Digital advertising services inquiry.

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