The Federal Court has ordered SmileDirectClub Aus Pty Ltd and its US parent company, SmileDirectClub LLC (together SmileDirectClub), to pay penalties totalling $3.5 million and to compensate customers, after court action by the ACCC.
SmileDirectClub admitted that between May 2019 and October 2020, it made false or misleading statements to consumers on its website and in emails, SMS text messages and information cards provided in store, in contravention of Australian Consumer Law.
The statements represented that consumers may be entitled to a reimbursement from their private health fund for part of the cost of the company’s teeth aligners and related treatment.
The vast majority (98.5 per cent of the market) of Australian private health insurance companies did not provide coverage for the costs of SmileDirectClub’s aligner treatment.
In the relevant period, at least 26,300 consumers signed up for SmileDirectClub’s aligner treatment, at the cost of between $2,499 and $3,155.
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“This was concerning conduct, and we began receiving complaints from affected consumers about it shortly after SmileDirectClub entered the Australian market,” ACCC Commissioner Liza Carver said.
“As a result of the misleading claims, some consumers with private health insurance which included orthodontics coverage may have purchased SmileDirectClub’s aligner treatments on the understanding that they would get some money back from their health fund, when this was not the case.”
“Making false or misleading statements is a breach of Australian Consumer Law. This outcome is a reminder to all companies, whether established businesses or new entrants, that they must ensure they comply with Australian consumer laws when they sell their products and services to Australian consumers,” Ms Carver said.
The Court also ordered SmileDirectClub to compensate affected consumers. SmileDirectClub will contact consumers who are potentially eligible for redress. Consumers who believe they are entitled to compensation should check their emails for communications from SmileDirectClub or can contact SmileDirectClub at [email protected](link sends e-mail) or on (02) 6145 2903.
The Court also made other orders, including requiring SmileDirectClub to implement a compliance program and to pay a contribution to the ACCC’s costs.
SmileDirectClub admitted it had contravened the Australian Consumer Law and made joint submissions with the ACCC in respect of penalties and other orders. It also commenced reimbursing some consumers prior to the Court making orders.
