The regulator has sent a powerful message to agencies that they must be able to substantiate any marketing about the value of buying real estate.
Consumer Affairs Victoria announced that it had accepted an enforceable undertaking from Accrue Property and that the Melbourne firm would pay $5,000 to the Victorian Consumer Law Fund.
Accrue “agreed to amend information from its website that, in the view of the director of Consumer Affairs Victoria, is false or misleading”.
It also acknowledged that “its conduct, in the director of Consumer Affairs Victoria’s view, contravened the Australian Consumer Law”.
Consumer Affairs found that Accrue made nine false or misleading statements on its website.
One of the claims was that property can “deliver a faster and higher rate of return” than other traditional investments.
Accrue claimed that investors could expect an average return of five per cent from banks, eight per cent from shares, nine per cent return from managed funds and 10 per cent from property.
The firm also said that property is “one of the only assets where the family home can be used to secure more assets without risking the home” if a non-recourse loan is used.
Another of Accrue’s claims was that it could help clients “acquire large amounts of property, leveraged for maximum capital growth, with minimal money down, zero holding costs and no interest fees”.
Consumer Affairs said those statements were “each materially false in some detail”.
The regulator said it wrote to Accrue in February 2014 and asked for it to substantiate the claims but that the company failed to do so.
Accrue must now advise its property investment clients that “no investment strategy is foolproof” and that “no return is ever guaranteed”, according to Consumer Affairs.
It has also agreed to remove all false or misleading claims from its website and to submit to a two-year compliance program to ensure all company statements comply with the Australian Consumer Law.
The Australian Consumer Law states that “a person must not, in trade or commerce, engage in conduct that is misleading or deceptive, or is likely to mislead or deceive”.