The Australian Competition and Consumer Commission is suing Magnamail and its Sydney-based parent company Direct Group in the Federal Court for attention-grabbing promotional materials it alleges were misleading.
The company allegedly sent fake promotions to hundreds of thousands of consumers via letters, envelopes, catalogues and scratch cards.
The attention-grabbing language used in the material included statements such as: "YOU HAVE DEFINITELY WON a prize valued up to $20,000."
But the prizes had already been drawn and nobody except for a small number of already determined winners were eligible for the money or items on offer, the commission alleges.
"We are very concerned that Magnamail allegedly misled many consumers, some of whom were elderly or vulnerable, and may have enticed them to buy products by representing that they were, at that time, eligible for a major prize, even though they were not," chair Gina Cass-Gottlieb said on Friday.
"We allege some consumers paid for products they might not otherwise have ordered and some became distressed after being led to believe that they were eligible to claim up to $25,000 and then discovering this was false."
The commission said it had pursued the legal action after being contacted by many consumers about 12 promotions that occurred between May 2022 and July 2023.
Magnamail, which sells a range of merchandise through catalogues it distributes to the public, sent the promotional material based on its database of previous customers and others on file with its parent company.
Direct Group owns several other brands in Australia, including TVSN which braodcasts direct-to-customer product offerings on free-to-air and subscription TV channels.
The company has been contacted for comment.
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