Deliberately using Google Keywords to falsely advertise it was a government Fair Work agency was a bad move for workplace relations advisor Employsure because it resulted in a hefty $3 million penalty.
The penalty order was made by the Federal Court of Australia in Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5 (a Full Court appeal) (Rares, Stewart and Abraham JJ, jointly agreeing).
This is an analysis is followed by marketing commentary from Michael Field.
Background
Employsure advises employers and business owners across Australia upon workplace relations and workplace health and safety legislation. It is a private company with no affiliation with, or endorsement by, any government agency.
It was a successful start-up with revenues of around $150 million and a profit of approximately $25 million a year at the time of the offences. It had 23,500 clients in the 2021 financial year.
Employsure placed six advertisements on Google Ads over a period of two years (from August 2016 to August 2018) which contained select keywords (search terms) as part of its digital marketing strategy. The keywords were: “fair work commission”, “fair work Australia”, “fair work”, “fwc”, “fair work ombudsman”, Australian Government fair work” and “Australia fair pay”.
Employsure used these keywords because it knew that they were frequently used by business owners who were searching online for employment-related advice and who were seeking to visit the websites of major government agencies, namely the Fair Work Ombudsman, the Fair Work Commission and also Fair Work Australia for workplace advice.
For example, when a person made a Google search using the term “fair work ombudsman”, the headline of the Google Ad that appeared as the first search result said: “Fair Work Ombudsman Help - Free 24/7 Employer Advice”, which was an advertisement placed by Employsure.
If the person clicked on the hyperlink in the Google Ad, they were taken to a landing webpage operated by Employsure. If the person telephoned the number in the Google Ad, they reached an Employsure representative.
This is how that Google Ad appeared:
Note the headline of the government agency is in prominent blue font, and the impression given is that the ‘Free 24/7 Employer Advice’ was sponsored or approved by the government agency, the Fair Work Ombudsman, even though the free advice was to be provided by a private entity (i.e. Employsure).
The name Employsure does not appear at all in the Ad.
Employsure designed these advertisements and paid to place them on the Google platform as Google Ads. The keywords were chosen carefully so as to ensure prominent placement i.e. top of the landing page when a person keyed in the keywords.
The marketing strategy was successful - each Google Ad prominently appeared as the first result on the page of search results and drove traffic to its business.
Misleading conduct under the Australian Consumer Law
A business which purchases a product or service which costs less than $100,000 (including GST) is treated as a consumer under the Australian Consumer Law. The advisory services Employsure provided needed to comply with the Australian Consumer Law (ACL) when advertising on Google Ads because it provided services to businesses which would cost less than $100,000.
The Court found that Employsure had breached the three sections of the ACL relied upon by the consumer regulator, the ACCC. They were:
Section 18(1) Employsure had engaged in misleading or deceptive conduct by making its Google Ads look like they were placed by a government Fair Work agency.
Section 29(1)(b) Employsure had made a false or misleading representation that its services were of a particular standard, quality or grade.
The Court explained:
“the business owners who googled the relevant keywords may have been in commercial distress”.
“the majority were likely small business owners” [who are] “entitled to rely on the belief that Commonwealth Government organizations exist to serve the public good, not to make a profit as was the case with Employsure, which made representations that its services had government sponsorship or approval. In doing so, it falsely and misleadingly represented that its services were of a particular standard or quality.” [judgment, para 95]
Section 29(1)(h) Employsure had made a false or misleading representation that its services had government sponsorship and approval, when they did not.
Penalty
The Court said that the conduct was “very serious” and that there was “a great need for general deterrence in the circumstances”.
The Court increased the penalty from $1 million which the trial judge had imposed to $3 million. The Court considered the higher amount to be an amount which “contains a sufficient sting to ensure that the penalty amount is not such as to be regarded by Employsure or others as an acceptable cost of doing business”.
The Court also ordered Employsure to pay the ACCC’s legal costs of the penalty hearing and appeal.
Conclusion
Even start-ups must comply with the Australian Consumer Law when using Google keywords.