The company behind AMI has been fined by the Federal Court for failing to comply with orders that restrained it from making representations about the efficacy of its treatments
NRM Corporation Pty Ltd and NRM Trading Pty Ltd (together, NRM), which owns and operates the Advanced Medical Institute, has been fined $350,000 by the Federal Court for failing to comply with court orders made in April last year.
The orders were made after the ACCC commenced proceedings against NRM over the representation of its services, which involved selling medical treatments to men suffering from erectile dysfunction and/or premature ejaculation.
In those earlier proceedings, Justice Tony North had found that NRM had engaged in “unconscionable conduct” and used unfair contract terms in the way it promoted and supplied medical services and medications.
He made orders to permanently restrain NRM from making representations about the efficacy of AMI treatments, except where they were made by a duly qualified medical practitioner during face-to-face consultations.
The decision was subsequently upheld by the Full Federal Court.
However, just months after Justice North passed down his decision, the ACCC filed contempt proceedings against NRM for their alleged failure to comply with the orders.
These proceedings were in relation to statements made on the AMI website, in radio advertisements broadcast across Australia, and in a television advertisement broadcast on 2,421 occasions between 25 April 2015 and 30 July 2015.
On 17 December 2015, Justice Mark Moshinsky found NRM had failed to comply with the court orders and the group’s appeal was subsequently dismissed in July 2016.
In determining the fines to be imposed, Justice Moshinsky said the breaches were “serious” given the number of breaches, the notice that NRM received about the breaches from ACCC solicitors, and the period of time over which the breaches occurred.
“This is not a case of technical breach, that is, where the breach is casual, accidental or unintentional. NRM was aware of the orders and may be taken to have understood them, having been represented by lawyers at all relevant times,” he said in his judgement handed down on 1 December 2016.
“NRM continued to engage in the conduct after it was warned by the ACCC’s solicitors that it was in breach of the orders. NRM has not provided any explanation of how the breaches of the orders came about. NRM’s behaviour does not indicate contrition.”
He fined NRM $350,000 and also ordered the company to pay the ACCC’s costs.
The fines are to be paid within 14 days of the decision.
While the ACCC was successful in its application, Adjunct Associate Professor Ken Harvey from Monash University says that the ACCC is “behind the ball” when it comes to shutting groups such as NRM down.
He told AJP that “scam merchants” are “setting up new scams far faster than the ACCC and the courts can deal with old ones.”
A/Prof Harvey suggests that the current regulators are “paper tigers” and the regulatory system is in need of reform.