Federal Court slaps bedding supplier Emma Sleep with $15m pecuniary penalty

“The Emma Sleep companies breached the Australian Consumer Law by making false or misleading representations which gave consumers the impression they were getting a bargain,” said Luke Woodward, ACCC commissioner, in a media release. 

There were two types of representations: 

• savings representations: representations that the advertised purchase price included a discount 
• limited time sale representations: representations that the products were on sale for the advertised price for limited periods and/or were only purchasable at the advertised sale price during sales campaign periods 

“The ACCC was concerned that Emma Sleep's conduct created a false sense of urgency about the offer by using a countdown timer that reset itself, and by making false claims suggesting to consumers that the sale was ending soon, which may have pressured them into making a rushed purchase decision,” Woodward said. 

The Federal Court did not attribute Emma Sleep’s representations to inadvertence or a system error. Instead, the court determined that Emma Sleep made these representations as a part of a deliberate marketing strategy and turned a blind eye to whether its conduct violated the ACL.

Regarding the pecuniary penalty, the ACCC sought $36m, with Emma Sleep AU and Emma Sleep SEA liable for $18m each. Emma Sleep countered that $2m was enough. 

Apart from the $15m pecuniary penalty imposed, the Federal Court of Australia found it appropriate to issue the orders agreed by the parties, including an injunction, an order to implement a compliance program, and an order to publish corrective notices. The Federal Court reserved the issue of costs. 

Emma Sleep’s marketing activities

The ACCC emphasised that, within the relevant period: 

• Emma Sleep’s website received over 4.9m visits 
• Emma Sleep’s social media posts had more than 10m views 
• Emma Sleep sent emails with misleading sales representations to over 4m consumers and text messages to almost half a million people 
• Emma Sleep sold more than 243,000 individual products 
• Emma Sleep received over $134m in revenue 

“When marketing their products companies and their executives must ensure they do so honestly, responsibly and in compliance with the law,” Woodward said in the media release.