ASIC wins case against Mayfair’s deceptive ad campaign
Following proceedings brought by ASIC in April 2020, the Federal Court concurred with the charges and found that companies in the Mayfair 101 Group made “false, misleading, or deceptive” statements in their ads. The Court found that Mayfair’s debenture products were comparable to bank term deposits when Mayfair’s debenture products exposed investors to significantly higher […]
Following proceedings brought by ASIC in April 2020, the Federal Court concurred with the charges and found that companies in the Mayfair 101 Group made “false, misleading, or deceptive” statements in their ads.
The Court found that Mayfair’s debenture products were comparable to bank term deposits when Mayfair’s debenture products exposed investors to significantly higher risk than bank term deposits.
The terms empowered Mayfair to extend the time for repayment for an indefinite period of time, which could result in investors not receiving capital repayments on maturity or at all.
Designed for investors seeking certainty and confidence in their investments, the debenture products supposedly carried no risk of default, but there was a risk that investors could lose some, or all, of their principal investment.
Mayfair’s M Core Fixed Income Notes were also used in a deceptive way as they were lent to a related party and not secured by first-ranking, used to pay deposits on properties prior to any security interest being registered, and used to purchase assets that were not secured by first-ranking.
Justice Anderson found that the Bank Term Deposit Representation “was misleading or deceptive and created a false and misleading impression that the Mayfair Products were comparable to, and of similar risk profile to, bank term deposits… In light of the evidence relied on by ASIC, the Mayfair Products are not comparable to, or a proper alternative to, bank term deposits.”
“It is tolerably clear that the Defendants’ marketing strategy was addressed to persons searching for a term deposit in order to divert them to the Defendants’ websites”, said Justice Anderson, adding that “Mr. Mawhinney was the directing mind and will, and the ultimate beneficiary, of each of the Defendants’.
Karen Chester, Deputy Chair at ASIC, said: “ASIC’s success in Court today demonstrates firms need to do the right thing by their investors, even when they are wholesale investors. They need to make sure they accurately describe their products when advertising. The Court has shown that Mayfair 101 engaged in misleading and deceptive conduct by claiming its products were comparable to bank term deposits when they were not.”
Since late 2019, ASIC has identified 30 funds with over $10 billion across these funds, that were misleading investors through online advertising,
In 2020, ASIC found Mayfair Platinum and Mayfair 101 used sponsored link internet advertising through Google AdWords and Bing Ads for keywords such as “bank term deposit” or “term deposit”. Its promotional material included misleading expressions such as “term deposit alternative”, “term investment” and “fixed term”, “certainty” and “confidence”; “first-ranking”, “unencumbered” and “dollar-for-dollar” security.
Mayfair Director James Mawhinney is prohibited from advertising and soliciting funds in connection with any financial product.
In April 2020, only days after ASIC’s injunction, the Federal Court issued interim orders restraining Mayfair Platinum and Mayfair 101 from promoting their debenture products and prohibiting the use of specific words and phrases in their advertising.