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Purplebricks under fair trading body’s microscope

08 May 2018 Eliot Hastie
Purplebricks, magnifying glass, looking into

Australia’s fair trading bodies are looking into fixed-fee real estate agency Purplebricks following its prosecution in Queensland earlier this year.

In March this year, Purplebricks was ordered to pay a penalty of $20,000 by the Queensland Office of Fair Trading after claims that the group had misled consumers.

However, the specific act that Purplebricks was convicted for was under a Commonwealth Act and it is for that reason that REINSW CEO Tim McKibbin believes a nationwide investigation is worthwhile.

“Given that the law they were prosecuted under is a Commonwealth legislation, I thought it at the time reasonable, given the successful prosecution in Queensland against Purplebricks, you could make the case that they were also subject to a breach for the same services in NSW,” Mr McKibbin said.

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Consumer complaints made to REINSW in relation to properties being sold on Purplebricks prompted Mr McKibbin to lodge a complaint to the consumer watchdogs in NSW.

“We’ve been the recipients of consumer complaints in relation to Purplebricks and that’s taken the form of their services. There’s been some discontent where properties haven’t sold, and the vendor is required to pay,” the CEO said.

Mr McKibbin added that the nature of Purplebricks meant that the consumer was meant to pay regardless of outcome, which is a change in the traditional model.

“People are being misled in relation to their fees. They believe they are getting a cost-effective outcome where in truth they are being asked to pay for a service regardless of whether that service makes an outcome,” the CEO said.

When Mr McKibbin approached the NSW Fair Trading body, he was informed that a nationwide investigation was currently underway.

“They responded by saying that the issue was being looked at nationally and that the regulator that had led on it was in WA,” the CEO said.

An NSW Fair Trading spokesperson said that there is currently no investigation into Purplebricks, but the body is working with Purplebricks.

“Fair Trading is currently working with Purplebricks to ensure the business is compliant with NSW and national legislation. Fair Trading is not currently investigating Purplebricks; however, we are working closely with other State and Territory Fair Trading agencies with regard to its business model,” they said.

When approached for comment, the Department of Mines, Industry Regulation and Safety in WA (the equivalent of Fair Trading in WA) said that they could not provide a comment at this time.

“Unfortunately, we cannot confirm or deny any investigation is underway unless prosecution action has been commenced or the commissioner uses his powers to issue public warnings,” a spokesperson said for the office.

Purplebricks chief marketing officer Matt Siddons also said that they had not been approached by any regulatory body regarding an investigation.

“To our knowledge, there is no investigation,” Mr Siddons said.

Mr Siddons said that they had a good relationship with Fair Trading Queensland and were not currently in dialogue with them.

“We accepted their undertakings, we’ve met those. We are always looking for ways to make our proposition clearer and some of the suggestions that came back from OFT were helpful,” Ms Siddons said.

Mr McKibbin acknowledged that Purplebricks has a place in the market as there would always be people who looked for cheaper methods.

“All of their marketing indicates, or at least their earlier marketing, as saying ‘we are the most cost-effective way to get the job done’,” Mr McKibbin said.

But he stressed that the lower fees did not mean that consumers would get the best deal for their property or have someone working for them.

“You have to ask yourself as a vendor, are you getting the best price? You have to make an assessment, whether or not you’re happy to take a lower price or are you prepared to have a competent agent seek the best price in the market,” the REINSW CEO said.

Purplebricks under fair trading body’s microscope
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