ACCC cracks down on AMI

The competition regulator has boosted its crackdown on Advanced Medical Institute, alleging the erectile dysfunction company has failed to inform customers that it is insolvent and might not be able to provide its promised goods and services.

AMI went into administration late last year, one day after the Australian Competition and Consumer Commission launched legal action against the company, alleging unconscionable conduct towards consumers. These investigations are still proceeding, with the Tax Office and Fair Work Ombudsman reportedly on the company’s tail for unpaid super and underpayments to call-centre employees.

Tomorrow it will ask the Federal Court to stop AMI from taking on new contracts from July 20.

The ACCC argues AMI has failed to advise existing and potential patients that it is in administration, is insolvent and may not be able to provide goods and services after determination of the administration period.

“The ACCC further alleges that AMI has wrongly accepted payments in advance for treatments when there is a real risk that AMI will not be able to continue to supply its treatments to patients and that patients will not receive refunds claimed by them, after the conclusion of its administration,” it says.

But BDO partner Laurie Fitzgerald has accused the ACCC of attacking AMI because it does not like the business, The Age reports.

Fitzgerald argued in the paper that AMI is not required to advertise the insolvency on its website and customers are not at risk of losing their money because the administrators have assumed liabilities.

Jim Downey, principal at insolvency and reconstruction specialists JP Downey, concurs that administrator-protection is normally taken under consideration.

He adds that legislation compels administrator appointment or subject to deed of company arrangement to appear on documents such as invoices and cheques.