Scam-related enforcement activities

Federal Court finds Sensaslim misled franchisees about Peter Foster’s involvement

The Court also found that SensaSlim engaged in misleading or deceptive conduct by making false representations about the role of a number of SensaSlim’s officers who were found to be knowingly concerned in and party to some of SensaSlim’s contraventions.

The Courts findings in 2014 arose from the long standing pursuit of those behind a scam to mislead people into purchasing franchises for weight loss products. SensaSlim Australia Pty Ltd supplied an oral spray that was claimed to cause weight loss, and represented that the solution was the subject of ‘a large worldwide clinical trial’. The spray was distributed through franchisees to be on-sold to consumers through retail outlets. Around 110 areas were sold to franchisees for the cost of $59 950 each. SensaSlim earned approximately $6.4 million from the sale of these franchises.

In his judgment, Justice Yates found that, ‘the evidence presents a convincing picture of Mr Foster as the puppeteer who pulled all the strings [in SensaSlim]’ and ‘Mr Foster controlled and directed, in an executive capacity, the way in which the SensaSlim business was carried on.’ He said that ‘the failure to disclose Mr Foster in the Disclosure Document was deliberate.’ 

His Honour also found that ‘the clinical study of the SensaSlim Solution … is a fabrication, intended to lead prospective franchisees into the false belief that the efficacy of the SensaSlim product as weight loss product had been established scientifically’.

This case was particularly significant because Mr Foster went to great lengths in order to hide his involvement in the SensaSlim business from franchisees and others.

In a separate but related decision, the Federal Court dismissed an appeal by Mr Foster against his three year imprisonment sentence that arose out of earlier contempt proceedings for breach of court orders. Mr Foster filed this appeal without personally appearing before the Court, at a time when he had failed to surrender himself to the court and there were outstanding warrants for his arrest and imprisonment. 

Justice Dowsett found that Mr Foster has blatantly disregarded the court order of 26 September 2013, requiring his court attendance on 27 September 2013. Mr Foster did not offer any justification for not attending court. In October 2014 Mr Foster was arrested for failing to appear at a sentencing hearing.

The cases demonstrate that the ACCC will take all necessary action to ensure that court orders designed to protect consumers are enforced.

4. The top 10: 2014’s most significant scams

4.1 Overview of most common scam types reported to the ACCC

Table 7 provides an overview of all scam types reported to the ACCC in 2014 in order of number of contacts per category.