Digital advertising business, Multimedia International Services Pty Ltd, trading as The Community Network, (TCN), has been fined $230,000 and accepted court enforceable undertakings for engaging in unconscionable and misleading conduct in its dealings with small businesses throughout Australia.

TCN sells digital advertising which is presented on branded LCD screens at sites such as fitness centres, newsagencies and shopping centres.

In one instance, TCN refused to release a business from its contract for advertising services when it was not providing those services, and then pursued the debt. TCN also used a standard form contract which included an automatic renewal term.

In this case, the ACCC was concerned that the automatic renewal term was misleading to TCN's customers, but under new laws to take effect in November this year, the ACCC could also argue this term was an unfair term according to the unfair contract provisions. From November, the unfair contracts regime will be extended to include standard form contracts with small businesses.  See our previous article  Federal Government passes new laws extending unfair contract terms protections to small business contracts. One of the terms that the regime presumes is unfair (in the absence of evidence to the contrary) is a term that permits a party to unilaterally renew the contract.

In the undertaking TCN provided it agreed that any automatic renewal term would be drawn to the attention of any potential advertiser, and any advertiser would have an option (without penalty) not to renew automatically. It also agreed to allow the advertiser to terminate the contract at certain stages, and that if it was to change the site it displayed the advertising, TCN would give the advertiser notice and the option of terminating the contract without penalty.

As well as the $230,000 fine, and the undertakings, TCN also agreed to implement consumer law training for its staff, and to contribute to the ACCC's costs.

The case is a timely reminder for businesses to review the terms of their contracts with small businesses and their conduct in relation to such businesses, in the lead up to the change to the laws in November when the ACCC will have increased scope to prosecute in this space.

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