ACCC goes hard in prosecuting Advanced Medical Institute

The ACCC has brought an action against Advanced Medical Institute (AMI) in response to its full frontal marketing assaults on male erectile dysfunction. For the most part of the decade, the entire Australian population has been bombarded with its now infamous billboard advertisements asking questions like "Want More Sex?". AMI's on-the-hour radio ads use lightly camouflaged sexual innuendo to promote its nasal delivery system.

Once a creature of the night, AMI has of late thrust sexual content onto prime time television, radio, magazines and billboards. Not even the super market was safe from its attention, with AMI offering products promising enhanced sexual experience on your receipt docket.

The Case

The ACCC alleges that from 2008 to 2010 "AMI engaged in unconscionable conduct". This includes claims that "Doctors engaged by AMI were conducting consultations with patients in a manner which did not provide an appropriate diagnosis and medical treatment of male sexual dysfunction". The ACCC also claims that "AMI sales representatives promised patients that they would be entitled to a refund if the AMI treatments were ineffective in circumstances where the sales representatives did not accurately or clearly disclose the conditions on which the refund was offered".

What took so long?

AMI's advertising explosion of sexual content into mainstream marketing has raised the question of what took the ACCC so long to find its feet?

AMI was prosecuted by the ACCC in 2003 for a number of false and misleading advertising, including its promise to pay refunds to unsatisfied customers and its needle free procedures. The ACCC forced the company to run corrective advertising and refund customers.

In 2004, the ACCC also pursued former AMI spokesman Ian Turpie who admitted his claims of being cured of impotence by AMI in its advertising were false.

These ACCC punishments were nothing more than a small slap on the wrist for AMI as it continued trading successfully for the next 5 years.

However, AMI Was not flying under the radar. In 2008, the Advertising Standards Bureaux (ASB) banned a billboard that displayed the message "Want Longer Lasting Sex?".

AMI even won the ASB award for broadcasting the Most Complained About Ad of 2010. The relevant TV ad portrayed a man offering to help his wife get to a cookie jar on top of a cupboard using his erect penis as a step. Despite attracting more than 220 complaints, the ABS dismissed the complaints and cleared the ad.

The role of the ACCC is to protect the public interest and with a track record of causing offence and consumer distress it is a surprise that the ACCC has taken so long to act. It appears that there has been a long wait between the launch of AMI's nasal spray "technology" and the ACCC's final blow. AMI has had ample time to grow and develop as a company leaving many unsatisfied customers in its wake. It raises the question as to whether the ACCC's current focus on premium mobile services has left them with too many balls in the air?

Alternatively, (and cynically) we might argue that the ACCC sniffed money with the announcement that AMI would be offering its shares to the public. In other words, the ACCC has been keeping a close and watchful eye on AMI for an extended period of time.

What about protection?

The Federal Court heard that when AMI's general manager asked AMI director Jack Vaisman whether the representations made in the advertisements were true, Mr Vaisman replied: "Who gives a f---?"

The ACCC decided they do!

The introduction of the Competition and Consumer Act 2010 has imposed tougher restrictions on businesses to ensure the ACCC can police and punish companies who have a flagrant disregard for consumer practices. (see our article Goodbye Section 52 for a more comprehensive review of the Act)

What does this mean for you?

If you are a consumer this case may give you reassurance that products and services are regularly and fairly scrutinised by the ACCC.

If you are a trader - you need to follow the advertising rules set out in the Trade Practices Act! Supplier contracts and marketing and advertising materials must be reviewed by your legal team to ensure you are ACCC compliant.

Kelly Tomasich