Purplebricks promises no
misleading advertising of fixed fees and additional
services, and admits breaches of the real estate licensing
In January this year, Purplebricks real estate changed its
appointment forms, websites and advertising, to make clear
that consumers must pay the ‘fixed fee’ regardless of
whether Purplebricks are successful in selling the property
and that extra fees are payable for additional services.
Now we know why.
On 5 March 2018, the Queensland Government announced that
Purplebricks had entered into enforceable undertakings with
the Office of Fair Trading (the OFT) for alleged breaches of
the Australian Consumer Law and the Property
Occupations Act 2014.
The details are as follows.
The breaches of the Australian Consumer Law
Purplebricks is a real estate agency which provides real
estate products and services for a fixed fee. Consumers
appoint it to sell their property using an on-line form, a
‘Service Agreement’. Purplebricks provides the services
using real estate agents and sales persons employed by or
contacted to it.
Complaints were made to the OFT by consumers that the
Purplebricks website and advertising were misleading
- Consumers were not made aware in advertisements that
the fixed fees were payable regardless of whether a
property was sold. They needed to read the ‘Service
Agreement’ on the website to find this obligation.
- Consumers were ‘tied in’ to pay the ‘fixed fee’ for
the services because the agency appointment agreement
was not transparent (the approved form in Queensland –
Form 6 Appointment of a Real Estate Agent, was not
- Consumers were not told in the Agreement or on the
website that the additional fee paid for open viewings
on the ‘Accompanied Viewings’ option was for a limited
number of inspections.
- Consumers were charged additional fees for
‘Marketing Reviews’ to advise on future marketing
strategy for the property and for ‘Marketing Upgrades’
to purchase a listing upgrade to the standard listing on
www.realestate.com.au and www.domain.com.au when the
impression given was that they were all included in the
‘low fixed fee’.
- Some ‘Local Property Experts’ in Queensland did not
hold full real estate licences, only salespersons
These representations contravened contravened section
151(1)(g) of the Australian Consumer Law which
A person commits an offence if the person … makes a
false or misleading representation that goods or
services have sponsorship, approval, performance
characteristics, accessories, uses or benefits
Purplebricks undertook to ensure that for the next three
years all representations it makes, particularly those
concerning fees, additional services and real estate
licensing approval, will not be false or misleading; and to
pay a penalty of $10,000.
The Office of Fair Trading acknowledged that Purplebricks
had amended their appointment forms and processes to ensure
consumers were made aware of the terms of their fixed fee
charges and had amended their website and advertising to
ensure consumers were not misled.
The breaches of the Property
Occupations Act 2014 (Qld)
Purplebricks is a licenced real estate agent corporation in
The Office of Fair Trading investigated the business and
found that Purplebricks had contravened the Property
- To ensure that the software used to keep books,
accounts and records is not to allow deletion of trust
ledger accounts which did not have a zero balance; must
record amendments to records as separate transactions
and record information in chronological sequence (the
Microsoft Excel Spreadsheet software program used was
- To ensure that amounts received are to be paid into
the trust account in Queensland the first business day
after receiving an amount (the payments were made into a
bank account in Victoria
- To keep a copy of the licensee’s licence at each
place of business.
- To notify when a change occurs in the licensee’s
circumstances (e.g. a substituted licensee).
- To notify the opening of a place of business within
- To pay $10,000 to the Office of Fair Trading.
Purplebricks launched in Australia in September 2016. This
action taken by the Office of Fair Trading in Queensland is
the first time that an Australian Government Authority has
found that Purplebricks has failed to comply with the law in
its business practices.
Its failure was twofold.
- First, it failed to properly disclose that its fixed
fee was payable regardless of whether the property was
sold, and that its fee was not fixed because fees were
payable for ‘extra options’, particularly viewings and
- Second, it failed to comply with legal requirements
for holding a real estate agents licence.
There was no issue taken with the charging of a fixed fee,
as opposed to an agent’s commission calculated as a
percentage of the sale price.
The undertakings given are enforceable undertakings. As
such, court action can be commenced for breaching a term or
condition of the undertaking, as well as orders obtained
from the court to enforce the original undertaking.
Marketing Commentary by
Michael Field, EvettField Partners – www.evettfield.com
Marketers often get a bad rap, and in many cases, it is well
deserved. It is a common myth that the role of marketing is
to entice as many customers as possible to buy your product
or service, without too much concern for the customer’s
needs, or the suitability of your product or service for
Winning customers at the expense of business reputation is
never a good practice.
Great marketers see their role as being ‘guardian of the
customer’ and ‘steward of the brand’. This approach to
marketing is not only the morally correct way to operate
your business, but in most circumstances it will also
protect your business reputation if you ensure that you are
legally compliant and do not fall foul of consumer
The recent announcement that Purplebricks has entered into
enforceable undertakings with the Office of Fair Trading for
alleged breaches of the Australian Consumer Law and the
Property Occupations Act 2014 demonstrates that Purplebricks
risked their business reputation by not being compliant with
Purplebricks have now corrected their appointment forms,
websites and advertising, to make them compliant, to prevent
ongoing damage to their business reputation.