Federal Court Today Orders Credit Repairer Pay $1.7 Million
JORDAN MALOUF – UPDATE – $1.1 Million Payable To Victims Described In Court As “Vulnerable Members Of Society”
In the Federal Court on Monday, 23 April 2018 Justice Derrington ordered Jordan Malouf and his company Malouf Group Enterprises (“MGE”) to pay a total of $1.7 million as a result of a complaint by the ASIC and ACCC.
For a summary of the allegations made by ASIC see here: https://www.mycralawyers.com.au/summary-legal-proceedings-asic-filed-credit-repair-business-malouf-group-enterprises
Could Have Been Worse
The judge said that his initial thoughts were that the penalties were too low for the offending behaviour. After reading the joint submissions he accepted that the penalties represented the upper end of the business’ ability to make payment before it became certain that it would have to go into administration and the Director go bankrupt.
It was more important for compensation to be paid to the victims of the company then to set penalties so high that they were impossible to meet, the judge said.
Penalties Were Made by Agreement
When the matter came before the judge, all of the parties had agreed on what had occurred and on the appropriate penalties to impose. It must, therefore, have represented the best possible “spin” that could be put on the facts by the respondents.
The penalties were reduced because of cooperation with the authorities leading to saving of time and costs for ASIC and for the court. The matter had been scheduled for a two-week trial.
Enforceable Undertakings for $1.1 million
Mr Jordan Malouf and the company MGE have provided an enforceable undertaking to the court that they will make payment of $1.1 million over 18 months. This is to reimburse the worst class of victim, the 1176 individuals who paid money to have their credit history improved when there was no default on their credit history to remove.
An enforceable undertaking is effectively a promise to the court that you will do something. If you break the promise the court can take action against you.
Pecuniary Penalty (fine) for $500,000
Within 28 days Jordan Malouf has to personally pay $100,000 and company MGE has to pay $400,000 as a pecuniary penalty (fine) for the conduct of the business.
Within 28 days Mr Jordan Malouf and the company MGE has to pay $100,000 representing the costs of ASIC investigating and prosecuting the matter.
18 Declarations About The Conduct Of The Company
The court has ordered that 18 separate declarations of fact be made about the conduct of the company. These declarations will inform the public of the behaviour complained of and hopefully deter other companies from similar behaviour. We will publish the declarations once they are available.
Conduct was… Disturbing… Unconscionable… Deliberately False… Cynical… Misleading & Deceptive… Unfair!
The company admitted, among other things:
- making false testimonials on the Internet;
- claiming a reputation for good work within the industry that was unwarranted;
- using cynical scripts to lure people into buying services they either didn’t get or didn’t need; and
- making false promises of work that would be done on behalf of customers.
The court found that the company engaged in unconscionable conduct describing potential customers as “… vulnerable members of society having a low social economic status …” and “… who were in financial difficulties …”.
The court criticised television commercials and sponsored links that were published by the company as unconscionable.
The court found that the company engaged in misleading and deceptive conduct involving unfair tactics to get clients to pay money.
The court described the company’s conduct as “cynical” being calculated to secure payment of substantial fees for services in the full knowledge that the services actually provided would be rather limited.
Jordan Malouf’s Actions
Jordan Malouf was found to have devised and implemented the strategies employed by the company. He was found to have drafted and approved the television advertisements, website, advertising, client agreements and scripts used by the company. He was found to have engaged and trained the staff and supervised them to ensure that they followed misleading scripts.
For more information about the allegations made by the ASIC against Mr Jordan Malouf and the company MGE please see our earlier articles.
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