Agents and principals have been put on notice about making "grand claims” in their marketing, after one business was punished for misleading advertising.
ASIC has acted against companies associated with Nicheliving, a Perth business that offers sales, property management, development services and finance.
One associated business, Australian Property Alliance, has made a payment of $40,800 after being hit with four infringement notices for “misleading advertisements” published on websites, Facebook, YouTube and television, according to ASIC.
The ads in question claimed that consumers could obtain an investment property from “just $59 per week”.
ASIC found they were misleading because they “did not disclose the detailed assumptions and qualifications” involved in the associated negative gearing investment strategy.
Another flaw was that the ads didn’t reveal that consumers had to take out a mortgage to finance the purchase and pay $35,000 upfront, the regulator added.
Nicheliving’s director of marketing and sales, Ronnie Elhaj, said the group had not intended to mislead anybody, and removed the ads as soon as it became aware of ASIC’s concern.
Mr Elhaj told REB that Nicheliving was not guilty of making false claims but in failing to clearly substantiate those claims.
“I think that this legislation, if you have a look at it in detail, it can be hard to apply in real form,” he said.
“Making a link to further disclaimers isn't sufficient. You need to actually visualise those disclaimers, which sometimes can be constraining in a small space – for example, if you've got a Facebook post, it’s very hard to put all your disclaimers in the actual graphic.”
ASIC also announced that it had imposed new licence conditions on the Australian credit licence of Wealth WA, another business related to Nicheliving.
The regulator said it was concerned by old Wealth WA advertising that claimed borrowers could pay off their mortgages in eight years instead of 30.
ASIC deputy chairman Peter Kell said advertising must be clear, accurate and balanced.
“ASIC wants to ensure consumers have a clear understanding of the commitments they are entering into and are not misled by grand claims,” he said.
“We will act against companies where we consider their advertising is potentially misleading or deceptive.”