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16-203MR Kovacs Property Group pays penalty for misleading advertising
Kovacs Property Group Pty Ltd has paid a $10,800 penalty to comply with an ASIC infringement notice after producing potentially misleading advertisements online.
The statements were made on www.positivefuture.com.au, a website used in the promotion of the Investment Samaritan Offer, an investment offered within the Guardian Investment Fund. The statements were published over late 2015 and early 2016.
ASIC was concerned that the website emphasised the safety of the investment in terms of the return of capital and sustainable quarterly returns without providing an explanation of the key risks involved in the investment.
Of particular concern, the website did not explain that the funds invested are loaned to Investment Samaritan Pty Ltd, or of the risk that this company could default on the loan. Investment Samaritan Pty Ltd is reliant on a US-based companies identifying and sourcing distressed US credit card issuers and collecting credit card debts from US based consumers in order to meet its obligations to investors under the loan.
ASIC Commissioner Greg Tanzer said, ‘Advertisements for financial products and credit products should give a balanced message about the returns, features, benefits and risks associated with a product. ASIC will take action to address misleading or inaccurate advertising of investment opportunities to ensure investors are informed in their decision-making'.
Kovacs Property Group Pty Ltd had acted to revise the website once approached by ASIC and has co-operated to address ASIC's concerns.
The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.
Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) provides guidance to help promoters comply with their legal obligations not to make false or misleading statements or engage in misleading or deceptive conduct.
The guidance makes clear that advertisements should not overstate the potential benefits (such as safety) or create unrealistic expectations by giving undue prominence to benefits compared with risks.
If warnings, disclaimers and qualifications are required, they should have sufficient prominence to effectively convey key information to a reasonable member of the audience on first viewing of the advertisement. In the circumstances, a disclaimer that the investment is subject to risk, including the loss of capital invested, was not considered to provide a balanced view of the investment, particularly in the absence of an explanation of key risks.