A labour hire company in Melbourne has been fined more than $42,000 by the Federal Circuit Court for underpaying workers and breaching sham contracting laws.

Franco Cardamone’s business, which trades as Howsitgoingmate, has been found to have underpaid two employees a total of $1970 for short period of manual work in 2013 and 2014.

The court also found Howsitgoingmate breached sham contracting laws by misclassifying one of the employees as a contractor.

Cardamone was also found to have breached the law after failing to respond to a notice requiring him to hand over employment records to Fair Work inspectors.

Judge Heather Riley said the business had been the subject of a “litany of complaints”.

She also pointed out the employer watchdog had made Cardamone aware his conduct was unlawful.

“However, he continued to engage in it,” Riley said in her judgment.

“Consequently, the court can only conclude that the breaches were deliberate.”

Fair Work Ombudsman Natalie James said in a statement the court’s decision sends a strong message to employers doing the wrong thing.

James said deliberately underpaying workers and ignoring warnings is “extremely serious” conduct in comparison to unintentional breaches of workplace laws.

“We have received more than 30 underpayment allegations from employees of businesses operated by Mr Cardamone since 2013, and he must now pay a financial penalty for his unlawful and unacceptable conduct,” James said.

Alan McDonald, managing director of employment law firm McDonald Murholme, told SmartCompany the court’s decision sends a “solid warning” to Australian businesses.

“Over the last decade there has been an unhealthy trend of encouraging labour-hire companies to provide labour for work which should be performed by permanent employees as it is not temporary or short-term work,” McDonald says.

“The enforcing of award pay rates is more important than ever before.

“This case possibly represents the tip of the iceberg and must be a solid warning for the future.”

SmartCompany contacted Howsitgoingmate but the company declined to comment.

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Taylor Swift may have just wrapped up her Australian tour but when it comes to protecting her copyright the international pop star is just getting started.

Swift’s IP management company TAS Rights Management has filed a trademark application in the United States to copyright the use of “1989”.

It should come as no surprise, given the album and world tour of the same name is expected to earn the American pop star around $US100 million this year, according to Forbes.

Read more: How to get what you want in business – five lessons from Taylor Swift

And Swift has form; the pop star has previously acted to trademark lyrics from some of her songs, including “Nice to meet you, where you been?” and “this sick beat”.

According to trademark applications filed with the United States Patent and Trademark Office earlier this month, Swift’s management are seeking to copyright the use of “the literal element ‘1989’ appearing in a stylised manner” for all entertainment services, including live performances.

Swift is also seeking to trademark the use of “1989” for printed publications, notebooks and clothing.

The pop star is also looking to trademark the words “Swiftmas” and “Blank Space”, according to USA Today.

Could “1989” be trademarked in Australia?

Jane Owen, partner at law firm Bird & Bird, told SmartCompany Swift is not trying to trademark the use of 1989 as a marker of time, but rather a “very stylised” use of the date, such as a logo or album title.

“If it was a stylised logo and so on it would probably be accepted [in Australia],” Owen says.

“The rule is that for trademarks to be registrable, they have to have some inherent adaption to distinguish the goods and services from other traders.

“If the trademark is usually used to indicate, in this case, the time of the production of the goods or rendering of the services, it would not be considered adapted or distinguished. But if you threw it into a logo… then that probably has an inherent adaption.”

Owen says generally speaking, businesses and individuals are unable to trademark words that indicate the kind, quality, intended purpose or geographical origin of a product or service.

The reasoning behind this is to allow companies to be able to describe their products in a particular way and prevent a monopoly in a particular market.

“The exception is where you have sufficient evidence to be able to establish the mark has, in fact, become a distinguished trademark for your goods and services,” Owen says.

“The Moroccanoil [hair product] people had a lot of trouble getting their trademark registered as Morocco is a description of origin… so whilst it has become a popular product, it wasn’t registrable off the bat.” 

Nurofen will pull its pain-specific products from retailers’ shelves after the Federal Court ruled the company mislead consumers into thinking its products treated specific kinds of pain when, in fact, the ingredients are identical.

The Nurofen “specific pain” range consists of Nurofen Back Pain, Nurofen Period Pain, Nurofen Migraine Pain and Nurofen Tension Headache.

The court ruled Nurofen made representations that each product was designed to treat a particular type of pain when each contained the same active ingredient.

As a result, Reckitt Benckiser, the company behind Nurofen, has been ordered to publish corrective notices and pay the costs of the Australian Competition and Consumer Commission, which initiated the legal proceedings back in March.

ACCC chairman Rod Sims said in a statement the watchdog took action against Nurofen because it believed consumers were being misled.

“Truth in advertising and consumer issues in the health and medical sectors are priority areas for the ACCC to ensure that consumers are given accurate information when making their purchasing decisions,” Sims said.

“Any representations which are difficult for a consumer to test will face greater scrutiny from the ACCC … Price sampling conducted by the ACCC before the proceedings were commenced indicated that the Nurofen Specific Pain products were being sold at retail prices almost double that of Nurofen’s standard ibuprofen products and the general pain relief products of its competitors.”

In a statement issued to SmartCompany, a spokesperson for Nurofen said the current pain-specific packaged products will be removed from all retail shelves within three months.

In the interim, the packaging will be replaced with labels agreed to by the competition watchdog.

“Nurofen did not set out to mislead consumers,” the spokesperson for Nurofen said.

“Nurofen has co-operated with the ACCC in relation to these proceedings and will fully comply with the court order made today.” 

Rohan Harris, principal at Russell Kennedy Lawyers, told SmartCompany the Federal Court decision will make businesses think twice about marketing their products in a similar way. 

“If you market your products as having a particular characteristic but in fact they’re not any different from the generic or run-of-the-mill version and you’re wanting to charge a higher price, I think it’s always going to attract the attention of the authorities,” Harris says.

“There’s a particular sensitivity around anything represented to have medicinal properties where people would be inclined to pay extra for something that’s been represented as being over and above what they normally purchase.” 

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The Fair Work Commission has backed a business that sacked an employee for performing his job too slowly, making too many errors while dispensing customer prescriptions and regularly taking personal phone calls at work.

Umer Khattak started working for Your Discount Chemist, a pharmacy chain in regional New South Wales, in 2010 as a pharmacist-in-charge at Laurieton.

However, the Fair Work Commission heard he was sacked four years later because he returned from leave “significantly later than expected”.

Shortly afterwards, Khattak was re-employed at Your Discount Chemist’s Port Macquarie store, before commencing as pharmacist-in-charge at the chain’s Lighthouse store because the previous pharmacist-in-charge went on parental leave.

In June this year Khattak was notified his employment would cease because he was too slow at his job, made frequent errors and often took calls on his personal mobile phone during work hours.

The pharmacist took the matter to the Fair Work Commission, arguing his errors were due to the fact that the previous pharmacist-in-charge did not conduct a proper handover with him prior to taking parental leave.

The commission heard that during the course of Khattak’s employment two meetings were held where various aspects of his performance was discussed, including the fact that customers had complained about not receiving their medication promptly or correctly.

In his ruling, president Jonathan Hamberger sided with Your Discount Chemist and found the business had a valid reason for terminating Khattak’s employment.

“I consider that Mr Khattak was put on notice in relation to the issues that ultimately led to his dismissal and given an opportunity to improve his performance,” Hamberger said in his judgment.

“He did not avail himself of that opportunity.”

Andrew Douglas, principal at law firm Macpherson & Kelley, told SmartCompany businesses need to ensure their performance management is well-documented so they can mitigate legal risk and ensure employees know what is expected of them.

“With employees who are in their qualifying period, sometimes called their probationary period of six months, it is essential they are performance-managed from day one and where there are issues requiring management, they are immediately addressed,” Douglas says.

“There are two reasons for that. The termination of such an employee would avoid the unfair dismissal regime if done correctly. Secondly… it’s a huge cost to business [to retain an underperforming employee].”

SmartCompany contacted Your Discount Chemist but did not receive a response prior to publication.

SmartCompany was unable to contact to contact Khattak for comment. 

The Australian consumer watchdog is dragging LG Electronics to court over claims the company mislead customers about their rights.

The Australian Competition and Consumer Commission alleges LG told consumers any remedies for faulty televisions were limited to their manufacturer’s warranty.

Where the manufacturer’s warranty had expired, the ACCC alleges that LG told customers they were only entitled to a remedy if they paid the costs of assessing the faulty device.

The ACCC is seeking injunctions, penalties, corrective notices, legal costs and a trade compliance program from LG.

ACCC chairman Rod Sims said in a statement the ACCC will not hesitate to take action against manufacturers it believes have misrepresented consumers’ rights.

“When consumers buy products, they come with a consumer guarantee under the Australian Consumer Law that they will be of acceptable quality,” Sims said.

“This guarantee is in addition to any express manufacturer’s warranty. Although the manufacturer’s warranty only applies for a specified period of time, consumers will often still be entitled under the consumer guarantee to a repair, refund or replacement after the manufacturer’s warranty ends.”

A spokesperson for LG told SmartCompany in a statement the company is committed to its obligations under Australian Consumer Law.

“The ACCC has initiated action against LG Australia in the Federal Court over allegations that LG has breached the Australian Consumer Law with regards to consumer guarantees,” the spokesperson said.

“Due to the ongoing nature of these proceedings, no further comment will be made at this stage except to say that LG is committed to its customers and compliance with its obligations under the Australian Consumer Law.”

The matter is due to be heard in the Federal Court in Melbourne in February next year.

This is not the first time LG has been criticised by the ACCC.

In 2010, the ACCC accused LG of misleading Australian consumers over the energy efficiency characteristics of its fridges. 

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Unfair dismissal cases can be a legal minefield for small businesses that do not necessarily have the money to pay for a workplace lawyer.

The legal system is difficult to navigate at the best of times, whether it’s reading a section of the Fair Work Act or figuring out how to submit evidence to the Fair Work Commission.

With this in mind, SmartCompany has taken a look at some of the most important unfair dismissal cases of 2015.

Here are five lessons to be learnt from the commission’s rulings this year.

1. In some circumstances, a resignation can be treated as a dismissal

In October a labourer was awarded $37,500 in compensation after he resigned due to his salary being cut from $75,000 to $60,000.

Will Snow, senior associate at law firm Finlaysons, told SmartCompany that while the worker resigned, his 20% pay cut was seen by the Fair Work Commission as a dismissal.

“The commission found that it was a dismissal in that he had no other choice but to resign,” Snow said.

“You can demote someone lawfully by reducing duties and pay but if that reduction is found to be ‘significant’, then a dismissal will be found to have occurred.”

2. Jokingly threatening violence does not constitute misconduct

Last month a former employee at Visa Global Logistics was awarded $21,000 after she was sacked for allegedly telling a co-worker to “go and punch Stacey in the face”.

The woman argued the comment was meant as a joke and taken out of context.

As a result, the Fair Work Commission found there was not a valid reason for dismissal despite hearing evidence of previous arguments between the worker and fellow staff members.

Employment lawyer Peter Vitale told SmartCompany the woman’s behaviour fell short of misconduct because it did not constitute “an actual threat of violence” in the eyes of the commission.

“The employer also relied on a previous warning given to the employee for using offensive language, but the commission found that warning was not appropriate,” Vitale said.

“In this case, as far as the law is concerned, the employer simply got it wrong.”

3. Workers rarely win their jobs back but it does happen

In October, a McCain Foods employee won his job back after he was fired for fighting in the workplace.

The Fair Work Commission heard that while the man did not strike his co-worker, he did have hold of the other man’s clothing.

The worker successfully argued he acted in self-defence and, as a result, the commission ruled the dismissal was “disproportionate” to his conduct.

Employment lawyer Peter Vitale told SmartCompanythat while the Fair Work Act designates reinstatement as the primary remedy in an unfair dismissal case, very few disputes result in reinstatement being ordered.

“In this case, the commission considered the employee’s lengthy, unblemished service, his age and the difficulties he might face finding other employment, and the fact that he did not initiate the incident,” Vitale said.

4. Workplace training is essential

A former Coles employee from South Australia was awarded more than $4000 earlier this year after allegedly being involved in a physical and verbal altercation with two suspected shoplifters.

The woman took the matter to the Fair Work Commission, arguing she shouldn’t have been sacked and could have handled the situation better had she received better training.

While the commission found there was a valid reason for the employee’s dismissal, the commission ruled the sacking was harsh due to a “lack of notice or pay in lieu”.

Warwick Ryan, partner at Swaab Attorneys, told SmartCompany the case highlights the importance of staff training.

“Policy is one thing, but I think staff training is important because what was obvious in this case was emotions got in the way,” Ryan says.

“I think training helps in that regard.”

5. You can’t dismiss an employee who is temporarily absent due to illness or injury

A former employee at a business specialising in the design and fabrication of windows and window frames was awarded $50,000 by the Fair Work Commission this year after he was sacked for taking extra time off work to recover from surgery.

The employer also failed to attend the commission’s hearing and did not submit any written evidence.

The commission decided termination was considered to be “manifestly harsh, unreasonable and unjust”.

Sarah Lock, principal lawyer at Workplace Law Group, told SmartCompany the commission found there was a complete lack of procedural fairness given to the employee in this case.

“Employers need to ensure that they have proper policies, processes and procedures in place so that employees know exactly what is expected of them when applying and taking personal leave,” she said. 

Recent high profile data breaches and the prospect of mandatory data breach notification have put privacy on the agenda in Australian businesses. More than ever, now is the time to ensure your business has established a good culture and awareness around privacy compliance.

The government last month released an exposure draft of its mandatory data notification laws, which increases the stakes for businesses that suffer a data breach causing a ‘real risk of serious harm’. Whilst notification was previously recommended in such cases, businesses will no longer have a choice under these draft laws.

So here are five things you can do to minimise the risk of a data breach and avoid exposing the company to non-compliance with privacy laws.

1. Establish a culture of privacy compliance

Privacy compliance should not be the sole responsibility of a business’s legal or compliance function. These departments, along with external legal advisors, play an important role in interpreting and advising on privacy rules in relation to the business, but privacy compliance is the responsibility of everyone in the business that handles personal information.

The marketing team, for example, should understand the data it is collecting and the notifications required. The IT function will be able to ensure that a website is tested following an update - of which the failure to do so has led to several reported data breaches. The recruitment team will know what information they need from candidates. The customer service team deals with personal information on a frequent basis. Training and engagement should be undertaken with all these functions and any others that handle personal information.

When you start to notice employees from across the business becoming ‘privacy aware’ and asking questions regarding what can and cannot be done, you know a business is building a good culture of privacy compliance. In this environment, data breaches are far less likely to occur. And if there is a breach, what is ‘exposed’ is less likely to be non-compliant with privacy laws.

2. Audit stock of personal information and develop informed policies and processes

One of the most useful outcomes of developing a comprehensive and compliant privacy policy for your business is that you will have a far better understanding of what personal information is being collected, whether it is necessary for the stated purposes, and if it is kept for longer than needed. There is a requirement for a business to have a policy adapted for its individual circumstances and undertaking this exercise will mean a business can comply with other principles relevant to the quality and security of information stored by a business. Again, involve representatives from all relevant functions of the business in this exercise for the best outcomes.

3. Review contracts

During the audit process above, a business will probably find it receives personal information from third parties and that third parties store or handle personal information on the business’s behalf. If possible, it is therefore important to ensure that these third parties have contractual obligations to comply with Australian privacy laws. This is especially the case where the third party is overseas and the Australian laws do not otherwise apply to it. Clauses can be drafted around specific measures the third party is required to take and liability and indemnity provisions inserted to reflect that privacy breaches can cost a business millions.

4. Encrypt data and probe to continuously improve your IT security measures

Businesses have an obligation to take “reasonable measures” to protect the personal information that they hold and to securely destroy or de-identify information that is no longer required by the business for the purposes stated in its privacy policy. The expectations of the Privacy Commissioner in respect of what measures are “reasonable” will differ depending on the nature of the business and the type of personal information held.

However, for a larger business it would be prudent to consider engaging external advisors or tasking similarly skilled staff to (for example) conduct network penetration testing to identify potential weaknesses. Even smaller businesses would be expected to implement reasonably available security measures, such as password protection of devices, firewalls, and malware detection and prevention software.

5. Develop a data breach response plan

The damage associated with a data breach can be minimised by putting plans in place that enable you to act swiftly and avoid major trust issues emerging amongst your customer base. In the event of a breach, it is not just the fact of a breach itself that will bring the wrath of the regulators and other stakeholders. A lot can come down to how a business responds. It will often need to respond very quickly, especially to contain the breach and to determine who, if any, of those affected will be notified and how. If these issues have been considered in calmer times, these steps can undoubtedly be undertaken more swiftly and effectively in the unfortunate event of a data breach.

The Privacy Commissioner has recently released a draft guide to developing a data breach response plan, a clear indication that the regulator believes developing such a document is best practice. Professional advisers can also be engaged to assist a business to develop a data response plan and any other policies or processes covering privacy compliance.

Dan Pearce is a partner at Holding Redlich and Emily Booth is a senior associate at Holding Redlich. 

Coles Express has agreed to stop using petrol price comparison website Informed Choices after the Australian Competition and Consumer Commission took it and a number of other servo operators to court.

As part of the settlement, Coles Express did not admit guilt and will not have to pay the competition watchdog’s legal costs.

Informed Choices provides regular petrol pricing updates to service stations.  

The competition watchdog alleges the price comparison platform decreases competition between servos and, as a result, consumers may be paying more for petrol.

ACCC chairman Rod Sims said in a statement he welcomed the news that Coles Express will cease using the Informed Sources service.

“I welcome and appreciate the decision of Coles Express to cease using the Informed Sources information sharing service at the earliest available opportunity, and without the need to go to a court hearing,” Sims said.

“The ACCC considers this to be an extremely positive step towards increasing competition in the petrol market, and is pleased to see this independent initiative by Coles Express.”

A spokesperson for Coles told SmartCompany Coles Express will cease using Informed Sources when its current contract inspires in April 2016.

“Coles Express operates in the highly competitive convenience and fuel market where a multitude of companies compete,” the spokesperson said in a statement.

“In the interests of avoiding a prolonged court process regarding the use of Brisbane-based fuel price monitoring company Informed Sources, Coles Express has agreed with the ACCC to resolve all proceedings.

“Coles Express will continue to offer its customers great quality, service and value in the convenience and fuel sector.”

The ACCC is still in negotiations with BP, Caltex, Woolworths and 7-Eleven regarding the Federal Court proceedings.

The matter is listed for trial in February next year. 

Unconscionable conduct proceedings against Woolworths by the corporate regulator announced this week are a (yet another) brave attempt to crack down on an activity that has been historically very hard to police.

But a looming review of Australian Consumer Law (ACL) in 2016 could provide a good opportunity to reassess the effectiveness of the unconscionability provisions and consider a prohibition of “unfair” conduct instead.

The Australian Competition and Consumer Commission (ACCC) alleges the supermarket giant has engaged in unconscionable conduct in dealing with a number of its smaller supermarket suppliers.

Woolworths introduced a scheme to reduce an anticipated profit shortfall by seeking payments – to which there was no enforceable contractual right - from over 800 of its “Tier B” suppliers. Failure to pay would give the impression the supplier was failing to “support” Woolworths. The proceedings commenced less than a year after Coles paid out $10 million to settle allegations of unconscionable conduct towards smaller suppliers.

On the face of it, the prohibition of unconscionable conduct in Australian consumer law provides a robust contribution to the ACCC’s efforts to protect consumers and small business people - particularly shop lessees, franchisees and grocery and food suppliers - from exploitation by larger, more powerful entities.

The reality is, however, that successful actions – especially in relation to business-to-business transactions - have been few. The reason? Establishing unconscionable conduct has proved to be notoriously difficult because of the high threshold imposed by the courts that restricts a finding of unconscionable behaviour to only the most egregious instances of commercial dealing.

Under ACL, the pivotal provisions that seek to address questionable business conduct are s20 and, of more utility, s21 ACL. Earlier incarnations in the former Trade Practices Act - somewhat controversially – introduced the prohibition of unconscionable conduct in small business transactions that has subsequently been extended to all transactions involving the supply or acquisition of goods or services.

Section 18 prohibits misleading or deceptive conduct while unfair contract terms are rendered void by the operation of s23 ACL. Despite ongoing debate as to its effectiveness and possible amendment, s46 Competition and Consumer Act 2010 (Cth) prohibits corporations with a substantial degree of market power from exercising that power for certain anti-competitive purposes.

Historically, the doctrine of unconscionable dealing seeks to protect the most vulnerable individuals from those who are aware of that vulnerability and seek to exploit it. Over time, prohibitions of unconscionable conduct were incorporated into the ACL and extended to include business-to-business dealings.

Unfortunately, the ACL does not define “unconscionable”. Resort to dictionary definitions refers to conduct that offends conscience. The issue is, at what point conscience will be offended; where do we place the “bar” that segregates conduct that is unconscionable with that which is merely “doing business”?

Despite guidelines inserted into the text of the legislation, the word remains loaded with traditional notions of extreme vulnerability and moral assessments. Despite some recent references to societal expectation, while the term remains in the ACL it is almost certain that the threshold will remain artificially high and enforcement action, except in the most egregious cases, will be constrained.

The ACL review will provide an opportunity to ponder the utility of the unconscionable conduct provisions in their present form.

For some time there have been suggestions that the ACL should incorporate a prohibition of unfair conduct. While the terms unfair and unconscionable may seem synonymous, the courts have been quick to point out that “conduct which is unfair or unreasonable is not for those reasons alone unconscionable”. The question becomes whether we persevere with an unconscionability standard or adopt another - arguably better understood - unfairness threshold that better reflects community expectations of commercial behaviour?

Understandably, such a development would raise concerns that dilution of the unconscionability provisions will lead to business uncertainty. Furthermore, unfairness is a nebulous term again susceptible to subjectivity and moral intrusion.

However, an unfairness standard operates effectively in several other jurisdictions, including the European Union and several US states without undermining the viability of commercial exchange. The concept of unfairness is better understood by both business and the community than unconscionability’s Dickensian “baggage”.

Advocates of this approach cite the economic benefits that could flow from enhanced protections, greater ease of regulatory enforcement and a the benefits of incorporating a prohibition based on community expectations.

Although it promises to be a robust discussion, perhaps it is time to seriously consider the incorporation of a prohibition of unfair business conduct into the ACL.

Eileen Webb, Professor, Faculty of Law, Co-Director Consumer Research Unit, University of Western Australia

This article was originally published on The Conversation. Read the original article.

The Australian Competition and Consumer Commission will formally investigate the safety of hoverboard scooters after a non-compliant charger sparked a blaze that destroyed a Melbourne home on Tuesday.

The unbranded toy is the seventh hoverboard to be recalled and consumers are being urged to return any of the listed recalled products for a full refund.

Federal small business minister Kelly O’Dwyer has now initiated a national inquiry into the devices.

In a statement issued to SmartCompany, a spokesperson for O’Dwyer said the fire in Melbourne raises serious concerns but is a matter for Victoria.

“The Victorian electrical safety authorities are assessing the electrical safety compliance of the hoverboard linked to the recent house fire in Strathmore, which is also being investigated by Victorian fire authorities,” the spokesperson said.

“Electrical safety is managed under state and territory laws. These products should comply with state electrical safety standards and display compliance marks, and be used, stored and charged carefully.”

The ACCC have said there are two key safety concerns with hoverboards, including fires that have occurred from the faulty design of some chargers and hoverboard  users injuring themselves through falls.

Compliant hoverboards and chargers should be stamped with the Australian Regulatory Compliance Mark, which is a triangle with a tick in the centre. Hefty fines will be issued for non-compliant toys of $4000 for individuals and $20,000 for companies.

Consumer Affairs Victoria inspectors are reportedly inspecting toy stores throughout the state and seizing non-compliant stock.

Victorian Minister for Consumer Affairs Jane Garrett said in a statement to SmartCompany she is concerned over the safety risks and potential devastating consequences of non-compliant devices. 

"Christmas toys should be fund but most importantly they need to be safe," she said. 

"I have instructed Consumer Affairs Victoria to conduct an immediate blitz across the state to make sure we don't have a tragedy."

Russell Zimmerman, executive director of the Australian Retailers Association, told SmartCompany this morning there are several things for retailers to consider.

“If they’re recalled then retailers will have to give them back [to suppliers],” he says.

“Under the law you will have to give [consumers] a repair, a replacement or a refund.”

Zimmerman says that while repairs seem unlikely, retailers could replace faulty hoverboards with a compliant brand or offer refunds.

“Some of these may have been bought in directly by people overseas,” Zimmerman says.

“If that is the case, 'buyer beware', you have then got to try and get in touch with the supplier overseas.”

Zimmerman says the best piece of advice for business owners is to “talk to your supplier immediately.”

Hoverboards have been banned in the United Kingdom and New York City after several fires were attributed to the devices.

The current list of recalled hoverboards in Australia includes:

• Moonwalker two-wheel scooter by Hunter Sports, (Big W)

• Sello Products self-balancing two-wheel electric scooter, (Ebay)

• AirWalk Self-Balancing Scooter (online via Catchoftheday.com.au)

• Go Skitz Self Balancing E Boards models S01 and S03 (charger only) (goeasyaustralia.com.au, goeasyonline.com.au, kogan.com.au, Toyworld, Harvey Norman Big Buys and Anaconda stores)

• Scooter Emporium – Self Balancing Scooter with Charger (Scooter Emporium);

• Techwheel Z-01 (charger only), (groupon.com.au, theactive.com.au, brandsexclusive.com.au, ozsale.com.au, techwheel.com.au).

• Mod Products – Mod Board Model MOD001 (Charger Only)

The Fair Work Ombudsman is taking a company that provides cleaning services to the Melbourne Cricket Ground to court for allegedly underpaying 11 overseas workers more than $37,000.

The employees, many of whom are international students, were allegedly employed directly by First Group of Companies.

The employer watchdog has also named ISS Facility Services Australia as an accessory to the alleged underpayments because the company subcontracted some of its cleaning work at the MCG to First Group.

Read more: Labour hire company fined $42,000 for breaching sham contracting laws

The Fair Work Ombudsman claims ISS was aware of First Group’s allegedly unlawful behaviour but took no action.

ISS also allegedly breached sham contracting laws and the rules around pay-slips, according to the employer watchdog.

Individual underpayments allegedly range from between $276 to $7272, according to the Fair Work Ombudsman.

A directions hearing is listed for February 19 in the Federal Circuit Court in Melbourne.

Both ISS and First Group each face penalties of up to $51,000 per contravention.

Fair Work Ombudsman Natalie James said in a statement the employer watchdog is committed to scrutinising supply chains and subcontracting arrangements in Australia.

“While many Australian employers want to do the right thing, there are some who seek to gain a competitive advantage by exploiting vulnerable workers, such as visa-holders,” James said.

“Companies found to be profiting from the underpayment of workers in their supply chains face legal risks, and risks to reputation and impact on their bottom line.”

Jess Walsh, the Victorian secretary of United Voice, said in a statement the cleaners’ union had exposed the alleged “widespread exploitation” of MCG cleaners back in 2014.

“Since then, the 7-Eleven, farm-workers and Myer scandals have all come to light, along with other outrages,” Walsh said.

“We’re pleased the Ombudsman is prosecuting ISS. This tells the big companies they cannot put their heads in the sand and blame the little guys further down the chain. They have to take responsibility for what’s going on in their own workplaces and make sure these rip-offs don’t happen in the first place.”

A spokesperson for ISS Facility Services Australia told SmartCompany the legal action undertaken by the Fair Work Ombudsman is a result of an investigation into one subcontractor who was working at a single ISS site back in 2014.

“When first notified of the potential issue, ISS took immediate action, including directly employing all those cleaners that were affected by the sub-contracting arrangement, which was immediately cancelled as soon as the allegations were made,” the spokesperson said in a statement.

“ISS will continue to support the FWO [Fair Work Ombudsman] throughout this process. ISS prides itself on self-delivering the vast majority of work required by its clients and on being an ethical employer, so it takes these allegations very seriously.”

ISS still provides cleaning services to the MCG.

Alan McDonald, managing director at law firm McDonald Murholme, told SmartCompany law enforcement agencies need to be vigorous when stamping out worker exploitation.

“Law-abiding companies paying proper wages and complying with employment and taxation laws should not be disadvantaged by others competing against them who do not comply,” McDonald says.

“It is unfair competition giving the rogue companies a cost-competitive advantage in a highly competitive world market.” 

SmartCompany was unable to contact First Group of Companies Pty Ltd for comment. 

The Fair Work Ombudsman is taking the former operator of a transport company to court for allegedly underpaying 12 truck drivers more than $143,000.

Sumerdeep Singh, the owner of now defunct company Sumer Bagri, is alleged to have made the underpayments between 2011 and 2014.

The employer watchdog is taking Singh to the Federal Circuit Court and alleges the former business owner also used false records in order to disguise his behaviour.

During the time of the alleged underpayments, Singh’s transport business delivered Woolworths groceries in and around Coffs Harbour through a contract with Linfox Australia.

The Fair Work Ombudsman alleges the drivers were underpaid their minimum hourly rates, along with casual loadings, overtime and penalty rates.

The employer watchdog began investigating the matter after a former employee raised concerns with the Ombudsman.

After the Fair Work Ombudsman began making enquiries with Singh, the former business owner is alleged to have produced false time records.

The records allegedly misstated the hours worked by employees and claim Singh himself performed deliveries when he was in fact overseas, according to the Ombudsman.

The employer watchdog is seeking a court order so that any penalties imposed are paid to Singh’s former employees.

A penalty hearing is listed for April 12 in Sydney, with Singh facing maximum penalties of between $3400 and $10,200 per contravention.

Nicholas Duggal, partner at TressCox Lawyers, told SmartCompany in his experience, courts take a dim view of businesses that attempt to mislead regulators.

“Employers who respond to workplace Ombudsman investigations in that matter, in my view, are much more likely to substantially expose themselves not only to the quantum of the underpayments but also the imposition of penalties at the higher end of the scale,” Duggal says.

“It’s also interesting to note they [The Fair Work Ombudsman] have gone to the length of assessing whether the company was paid enough under it contract to properly pay its workers.”

SmartCompany was unable to contact Singh and Sumer Bagri is no longer in operation. 

Australian startup giant Freelancer says it will fight a $20,000 fine handed down by Australia’s privacy regulatory for an alleged “reckless indifference to privacy rights”. 

The ruling, made by acting Australia Information Commissioner Timothy Pilgrim, says Freelancer “interfered” with the complainant’s privacy by not making him aware of the purposes for the company collecting his IP address information and for “disclosing personal information” not authorised under the Australian Privacy Act.

The ruling relates to the company’s user agreement allegedly not fully explaining the purpose behind collecting users’ IP addresses at the time and Pilgrim determining that Freelancer revealed personal information about the complainant through blog comments and Wikipedia edits.

As well as the $20,000 fine for financial loss and injury to emotional well-being, the startup will also have to provide a written apology to the man within six weeks and re-train its staff in new policies and procedures regarding privacy.

Freelancer to appeal

But deputy chief financial officer Christopher Koch says Freelancer will be appealing the decision.

“Freelancer disagrees with the outcome of this determination and in particular some of the facts that have been accepted as part of it,” Koch tells StartupSmart. 

“We are in the process of exercising our rights to appeal. As this matter is currently before the courts it would not be appropriate to comment further at this time.”

The complaint was first lodged with the Office of the Australian Information Commissioner in July 2013 by a “freelancer living in Europe” who registered on the platform in 2009.

Issues arose when the complainant made other anonymous, “dummy” accounts and was suspended multiple times by Freelancer.

The user then made a series of blog posts, Facebook comments and edits to the Freelancer Wikipedia page detailing his experiences.

The ruling says the blog post was then picked up by a third-party site, on which a Freelancer staff member commented:

"Yes pseudonym aka full name pseudonym aka full name pseudonym aka first name and initial of real surname, we are well aware of your grievances and your racist comments on your [name of blog]. You are well aware of the reasons your particular account was closed."

Freelancer also made edits to its Wikipedia page and allegedly disclosed personal information of the complainant in the revised history of the page explaining the changes.

"The bulk of the edits are coming from one individual who is using proxies to do the edits and heavily promoting vandalism of the page as a way to get back at the company on his blog (see post of Aug 2 on [name of blog site]). He is also the author of some of the links added or the primary poster (under a variety of pseudonyms including [full name/pseudonym/pseudonym."

The ruling

Although Pilgrim ruled that Freelancer’s collection of its users’ IP addresses to combat fraud as “appropriate and relevant”, he determined the company hadn’t made its users aware of the purposes behind this in its terms and conditions at the time.

“Freelancer had an obligation to take reasonable steps to make users of its website aware that other metadata such as IP addresses may be collected for risk management purposes,” Pilgrim says in the ruling.

“Freelancer did not take reasonable steps to ensure that the complainant was aware of the purpose of collection of his IP address information.”

He also ruled that Freelancer “improperly disclosed the complainant’s personal information” in the Wikipedia revision history and through the comments on the third-party blogging site.

The complainant originally sought damages of $70,000 for financial loss and injury to emotional well-being, but Pilgrim ruled there to be “no basis” for the first claim.

Despite saying the company’s actions “could be described as malicious, oppressive and/or high-handed”, Pilgrim acknowledged that Freelancer’s user agreement and privacy policy has been “extensively revised” since the complaint was lodged.

He ultimately ruled the fine should be $15,000 for general damages and $5000 for aggravated damages. 

“I am of the view that Freelancer’s improper conduct contributed to the decline in the complainant’s emotional wellbeing even if there may have been other contributory causes,” Pilgrim says in the ruling.

“Freelancer’s conduct in improperly disclosing the complainant’s personal information was in my view aggravated by its apparent lack of disregard [sic] for the complainant’s privacy and its own privacy obligations.”

“Freelancer has in my view demonstrated a reckless indifference to the privacy rights of the complainant.” 

While Freelancer prepares to appeal the decision, Koch says he isn’t concerned about its possible ramifications on the company’s reputation.

“We have nearly 20 million users on our platform and the number of issues we have like this is extremely small,” he says.

 This article originally appeared on StartupSmart.

The Fair Work Ombudsman has commenced legal action against another 7-Eleven franchise operator for allegedly underpaying staff thousands of dollars.

The employer watchdog alleges two 7-Eleven stores in Brisbane’s CBD short-changed 21 staff more than $31,000 between September 2013 and September 2014.

The employees, which include international students, were allegedly paid flat rates as low as $17.74 an hour.

Read more: 7-Eleven’s franchisee financial arrangement is ‘unusual’

Individual employees are allegedly owed amounts ranging from $98 to $5080.

The George and Adelaide street stores are operated by Jason Yuan.

Yuan was spoken to by the employer watchdog back in 2013 and faces maximum penalties of up to $10,2000 per breach of the law.

The franchisee also part-owns two companies called Vipper Pty Ltd and Viplus Pty Ltd, both of which face penalties of up to $51,000 per contravention of workplace laws.

A directions hearing is listed in the Federal Circuit Court in Brisbane for 22 February.

This latest matter is the sixth time the employer watchdog has initiated legal proceedings against a 7-Eleven operator since 2009.

Fair Work Ombudsman Natalie James said in a statement 7-Eleven is currently the subject of a national inquiry by the employer watchdog.

A final report into allegations of serious underpayments and false record-keeping practises is expected in the next few months.

Former head of the Australian Competition and Consumer Commission, Allan Fels, is also conducting an independent inquiry on behalf of 7-Eleven in the wake of serious allegations of underpayments and even a cover-up by head office.

The 24-hour convenience chain overhauled its franchising agreement late last year after several franchisees claimed the company’s business model made it practically impossible to pay lawful wages and break even.

A spokesperson for 7-Eleven told SmartCompany this morning the convenience chain does not condone staff underpayments and is co-operating with the Ombudsman to “stamp out the practice”.

“The company has introduced tougher payroll, time sheet and rostering compliance measures with a new system to be introduced in 2016,” the spokesperson says.  

“More than 95% of stores are operating under a new agreement which allows greater compliance, oversight and governance measures.”

Sarah Lock, principal lawyer at Workplace Law Group, told SmartCompany there’s enough education out there for employers to be aware of things such as minimum wages and awards.

“When running a business, it’s integral that you have a good knowledge of that when you’re hiring somebody,” Lock says.

“There’s a pay calculator on the Ombudsman’s site, you can call them, there’s the internet. So ignorance of saying you didn’t know is no excuse. But clearly the Ombudsman is concerned about them [7-eleven franchisees] taking advantage of overseas students who are often happy to just have a job. The Ombudsman is clearly trying to protect the vulnerable.”

SmartCompany was unable to contact Yuan for comment. 

The European Court of Human Rights has ruled a Romanian employer was within its rights to access and read private messages sent by one of its workers.

The case dates back to 2007, however, the judgment handed down by the court on Tuesday this week is being interpreted by some as having broad implications for how businesses manage employees using internet messaging platforms while at work.

Bogdan Mihai Barbulescu was employed as an engineer with a private company in Romania between August 2004 and August 2007.

Prior to his case reaching the European Court of Human Rights, it had been considered by multiple courts in Romania.

The court heard during the course of employment, Barbulescu was instructed by his employer to create a Yahoo Messenger account to use at work to respond to client enquiries.

However, on July 13, 2007, he was informed that his Yahoo Messenger communications had been monitored between July 5 and 13 and the company said the records showed he had used the internet for personal communications with his brother and fiancee.

Barbulescu responded to his employer in writing saying that he had only used his Yahoo Messenger account for work purposes, but the company terminated his employment on August 1, 2007, for breaches the company’s policy about using company resources for personal purposes.

Romanian courts originally ruled the employer had acted reasonably and that monitoring the online conversations was the only way the company could determine if Barbulescu had breached its internal policies.

However, Barbulescu took his case to the European Court of Human Rights on the grounds that his dismissal was based on a breach of his right to privacy.

He also argued before the court that earlier proceedings before the Romania courts were unfair.

Bu a verdict of six votes to one, the European Court dismissed Barbulescu’s case, finding it was not “unreasonable” for the employer to attempt to verify that he was completing his work during work hours.

“The employer acted within its disciplinary powers since, as the domestic courts found, it had accessed the Yahoo Messenger account on the assumption that the information in question had been related to professional activities and that such access had therefore been legitimate,” the court said.

“The court sees no reason to question these findings.”

Could the same thing happen in Australia?

Workplace lawyer Peter Vitale told SmartCompany “the basic rule in Australia is that an employer has a right to monitor communications which are engaged through IT systems owned by the company of employer”.

“In that sense, I think the default decision is that the employees don’t have a right to privacy in those circumstances,” he says.

Vitale says the issue of monitoring employee communications at work has been considered in several reviews of the Privacy Act, however, a right to employee privacy has not yet been legislated for in Australia.

However, Vitale says employers in New South Wales are required to provide advance notice to employees if their computers are to be monitored under the state’s Workplace Surveillance Act.

“More generally, it’s sensible for employers who want to engage in monitoring activity and perhaps disciplinary action on the basis of that monitoring, to have a clear policy in place about what and why and the consequences,” he says.

Andrew Douglas, principal in workplace relations at McPherson Kelly, told SmartCompany it is essential for employers to have policies and procedures in employment contracts that cover the use of company provided internet and networked devices.

“If the policies and procedures or employment contracts prescribe that the internet, mobile phones and computers are the property of the business, the employer is entitled to access the information on those,” he says.

Douglas also says employers in New South Wales in particular should ensure the correct policies and procedures are in place because of the state’s legislation governing surveillance in the workplace, adding a failure on behalf of the company to specify its policies could be “fatal” for that employer. 

A former Harvey Norman franchisee has been ordered to pay $52,000 in penalties for making misleading representations about consumer guarantee rights.

The company, Bunavit Proprietary Limited, previously operated a Harvey Norman Superstore in Bundall, Queensland.

After the Australian Competition and Consumer Commission initiated legal action against the franchise the federal court found that sales representatives at the store made 10 false or misleading representations to customers regarding the existence, exclusion or effect of a guarantee. 

The court found two customers were informed by the sales representatives that Bunavit had no obligation to provide a remedy or repair and could not assist unless the customers’ covered part or all of the repair costs.

However, under the Australian Consumer Law, faulty products sold must be repaired, replaced or a refund provided by the retailer.

The ACCC has now obtained $286,000 in penalties against 10 Harvey Norman franchisees for false or misleading representations of consumer guarantees since 2012.

Bunavit has incurred the highest penalty of the 10 franchisees, however, the business has since ceased trading.

Rohan Harris, head of the corporate commercial team at Russell Kennedy Lawyers, told SmartCompany consumers and sometimes retailers misunderstand the statutory aspects of consumer law.

“This is an example of it as the sales staff from what I can gather, were fully versed with what the Australian Consumer Law obligations entailed, and as a consequence the Federal Court has made the formal orders that it has,” he says.

“But I also think in many cases many retailers don’t have an understanding of what their obligations are.”

Harris says businesses must understand their obligations and ensure staff act in compliance with consumer law. As part of this, Harris says businesses should implement a process in dealing with customer warranty claims to avoid complaints escalating.

The ACCC becomes interested in complaints when there’s continuing issues or a “systemic, series of incidences that breach the law”, Harris says.

“They need to understand what their legal obligations are and if the customers entitled to redress,” he says.

Businesses can go to the ACCC for information about their obligations but Harris suggests anyone needing advice for specific circumstances should seek legal advice.

ACCC acting chair Dr Michael Schaper said in a statement business owners have a duty to ensure their staff understand the law.

“This penalty is a timely reminder to all businesses, whether large or small, that they must not mislead consumers about consumer guarantee rights under the Australian Consumer Law,” he said.

“Businesses are expected to take appropriate and effective steps to ensure that their staff understand the rights of consumers and the obligations of businesses under the consumer guarantees provided by the Australian Consumer Law.”

The ACCC received 249 complaints and 199 enquiries into franchise operations between January to June 2015.

SmartCompany contacted Harvey Norman head office but did not receive a response prior to publication. 

Online electronics retailer Kogan has paid $32,400 in penalties after the consumer watchdog took action over products advertised on the Kogan eBay store during its Father’s Day promotions.

The Australian Competition and Consumer Commission issued three infringement notices for the pricing of three computer monitors, which changed over a five-day period as part of a Father’s Day promotion last year.

From August 24 to August 29, consumers were promised a 20% discount on the three computer monitors as part of the promotion.

But the ACCC said in a statement this morning, Kogan had increased the prices of the three computer monitors featured on its eBay store prior to the promotion period, so the 20% discount really equated to just 9% off the previously advertised prices.

Shortly after the end of the promotion and 20%, the advertised prices of the three computer monitors returned to the previous lower prices offered.

The computer monitors named in the infringement notices are:

• Kogan 27” Cinema Display WQHD;
• Kogan 28” 4k LED Monitor; and
• Asus 27” LED Monitor PB278Q.

Nicole Wilson, senior lawyer at LegalVision, told SmartCompany this morning businesses need to be careful when communicating with customers that they are clearly stating the facts.

“If you let customers believe something about your products or services when it is not true, whether this was done intentionally or not, you will be in breach of the Australian Consumer Law,” she says.

Wilson says businesses must also be careful when running sales and promotions.

“Businesses should only ever offer ‘sale’ or ‘discount’ on their goods for a limited time,” Wilson says.

“You run the risk of the ‘sale’ price becoming the actual price if it is used for an extended period of time. If this happens the ongoing use of the term ‘sale’ or ‘discount’ in conjunction with the price will be misleading and you may be asked by the ACCC to justify your pricing.”

In a statement ACCC acting chair Michael Schaper said truth in advertising online products is a current enforcement policy for the ACCC.

“It is simply unacceptable for businesses to raise prices before applying a discount in order to give consumers the misleading impression that they are obtaining a larger percentage discount than is actually the case," he said.

Paying infringement notices from the ACCC is not an admission of flouting the Australian Consumer Law.

SmartCompany contacted Kogan but the company declined to comment. 

The Fair Work Commission has awarded a former botox salesman just over $20,000 in compensation after he was sacked for trying to be reimbursed for what his former employer says were not legitimate business expenses.

Daniel Girardi had been working as a product specialist for pharmaceutical supplier Allergan for more than seven years but was dismissed in June 2015 over allegations he failed to follow the correct procedures relating to travel expenses.

Girardi’s role involved travelling to various parts of South Australia and the Northern Territory to sell botox for the treatment of movement disorders, chronic migraines and other medical conditions.

The Fair Work Commission heard that in May last year, the former salesman travelled to Mount Gambier and later attempted to have his accommodation and meals reimbursed by the company.

However, Allergan did not approve the expenses and, on June 11, asked Girardi to review his diary and provide the business with details of who he visited on the Mount Gambier trip by noon the following day.

On the morning of June 12, without waiting for a response from Girardi, the business advised the former botox salesman of his termination via email.

Evidence provided to the commission showed Allergan wrote in the email there was a “clear breakdown between you [Girardi] and the company”.

“As such, your recent behaviour leaves us with no option but to terminate your employment, effective immediately,” the business said.  

Allergan advised that while it was not required to do so, it would provide one month’s pay in lieu of notice.

Girardi took the matter to the Fair Work Commission, arguing he did perform work duties while in Mount Gambier and was therefore not guilty of misconduct.

Girardi also claimed he was not given an opportunity to properly respond to the allegations and asked the commission to reinstate him.

In response, Allergan told the commission Girardi did not obtain prior approval for the trip and sought to downplay the fact his wife and son attended a jazz festival in Mount Gambier on the same weekend.

Fair Work Commissioner Peter Hampton found Girardi’s evidence to be “unconvincing in many respects” and it was “entirely reasonable” for his employers to be suspicious of the Mount Gambier trip.

“The Mount Gambier trip did involve some work being undertaken and there was some limited work purpose achieved,” Hampton said in his judgment.

“It was not a complete fiction as contended by Allergen, but represented a recklessly organised and largely unproductive exercise that facilitated some work being done during a trip that otherwise suited Mr Girardi for personal reasons.”

However, the commission ruled the dismissal was still unfair because Girardi was not given the opportunity to properly respond to allegations of misconduct.

Employment lawyer Peter Vitale told SmartCompany issues around travel and reimbursements are common workplace disputes.

“Questions of false expense claims come up regularly enough and it’s important that employers make clear to their employees what the rules are,” Vitale says.

“It’s more often than not the grey areas which enable people to get away with bending the rules.”

SmartCompany contacted Allergen but did not receive a response prior to publication.

SmartCompany was unable to conduct Girardi prior to publication. 

An 18-year-old Domino’s delivery driver has resigned after he was caught sharing a Change.org petition on his Facebook page that claimed the pizza chain is underpaying its workers.

The driver’s regional manager was alerted to the post by a mutual friend and then asked the employee why he had signed the petition in her own Facebook post, according to news.com.au.

The driver has since resigned, saying he thought he would be sacked.

In a statement issued to SmartCompany today, a spokesperson for Domino's said the driver's decision to resign was their own but it still should never have happened. 

The spokesperson says Domino's has offered the driver his job back and spoken to his store manager to ensure "correct processes and procedures are adhered to". 

Queensland man Keith Wade started the petition in question, claiming his 19-year-old son is paid $14.51 per hour, along with $2.27 per delivery.

Wade says his son has to pay the cost of running his own vehicle, which means after two hours of work he is paid $30 after expenses.

“Domino’s drivers are paid about half of what would be payable to them if they were paid the so-called minimum wage,” Wade said in the petition.

“This ability to underpay workers gives a commercial advantage to unscrupulous employers and penalises those employers who are paying correctly. This practice has been going on for many years. In fact, the drivers work under a workplace agreement from 2001. Yes, that’s right, it is 15 years out of date!”

As of Wednesday morning, the petition had been signed by more than 32,000 people.

People have also taken to Domino’s Facebook page to say they will buy their pizzas elsewhere.

“It is great to see Domino’s finally being scrutinised over its pay practices,” one person wrote.

However Domino’s has been on front foot, replying to individual customers’ concerns on Facebook.

“Rest assured we are a proud Australian employer and take all and any matters in relation to employee rights extremely seriously,” Domino’s replied to one disgruntled commenter.

“We rigorously monitor our stores through internal audits to ensure they comply with Australian employment law obligations and the Domino’s employment law policy and take a zero tolerance approach to any identified unethical behaviour.”

Are employers allowed to take action against staff who share petitions on social media that potentially damage their brand?

Andrew Douglas, principal in workplace relations at McPherson Kelly, told SmartCompany organisations are not allowed to discipline employees for out-of-work behaviour unless it has a “causal relation” to their work.

Douglas says when it comes to social media, the law says if an employee posts something online and it is visible during work hours or it is threatening or identifies someone at the workplace, then a “causal relation” can be established.

At the same time, if a petition is distributed by a union as part of workplace negotiations, then employees are protected from adverse action, according to Douglas.

As a result, Douglas says it will depend on the exact circumstances of a particular case as to what an employer can and can’t do about an employee sharing a petition on social media.

“Organisations need to exercise considerable care in intervening in out-of-work behaviour by employees unless the behaviour of the employees has a demonstrably severe impact upon work or people who work within the business,” Douglas says.

“Organisations can do incredible damage to their brand and reputation by failing to engage with employees who have significant grievances and responding inflexibly towards people who come together to complain about work.”

“When dealing with disenchanted and unhappy employees, make sure you have a clear strategic plan that sees you acting as a good community member and not as a resentful employer feeling chastised by its employees.”

Domino's is in the final stages of negotiating a new enterprise agreement and says the new agreement will provide "better pay and entitlements, which will in many cases exceed other employers in the industry". 

*This article was updated at 12.30pm to include a statement from Domino's

Small businesses are being warned to exercise caution when buying goods or services through social media, after overseas students in Australia were allegedly defrauded when buying airline tickets through social media.

More than 200 individuals living in Melbourne and Sydney could be the victims of a fake ticket scam estimated to be in excess of $360,000.

A 24-year-old woman was arrested earlier this month but has since been granted conditional bail, according to NSW Police.

She has been charged with 10 counts of dishonestly obtaining financial advantage by deception and is due to appear in court on February 3.

The woman in question began selling legitimate airfares through Facebook, however, Vietnamese students have recently reported the tickets provided to them were invalid or had been cancelled, according to the ABC.

According to reports, many of the individuals who purchased airline tickets had come across the Facebook group via referrals from people they knew.

Brett Warfield, chief executive of Warfield & Associates, told SmartCompany this morning when someone puts in a good word for a business, it increases the likelihood that someone will follow up on that lead and not necessarily undertake research of their own.

“If you’ve got someone who is recommending them in your community, it increases the chances you will invest based on a lack of other adequate information,” Warfield says.

“In this situation and some cases that have gone through the courts, it’s a more of a community-based fraud rather than cold calling on the telephone.”

However, Warfield says both consumers and small business owners should still apply the usual checks and balances even when a friend or colleague recommends a business.

This is particularly the case if they are a potential supplier or are selling big-ticket items such as airfares.

“I know a lot of small businesses just have a Facebook page, but you’ve got to look for some sort of footprint to see that they really exist,” Warfield says.

“In this case you would check if they have a travel agent’s licence. There should have been something on their Facebook page to indicate they were a licensed travel agent.”

Warfield also says a reputable organisation will usually also have a stand-alone website.

“Another [tip] would be to check on ASIC to see if their business name is registered,” he says.

“That doesn’t cost you anything – and you can search either a company name or a business name.

“If those things aren’t there, that should start a few alarm bells ringing.”