Purple is often made up of two colours, blue and red. In recent times, the purple has had to let go of the green.

Purplebricks has been made to pay a fine for their activities in Queensland. We have formerly written in relation to Purplebricks activities, in our article “Pinocchio comes in Purple” (https://www.leveragegroup.com.au/pinocchio-comes-purple/) about concerns with the misleading and deceptive conduct of Purplebricks.

Recently, Purplebricks has been required to enter enforceable undertakings regarding their activities. (https://www.smartcompany.com.au/business-advice/legal/purplebricks-penalty-queensland-fair-trading/

Purplebricks breached Australian Consumer Law and the Property Occupations Act through its actions between 2016 and 2017 in relation to:

  • Not advising consumers that their fixed fee payable was not refundable regardless of their property selling or the agreement was cancelled; and
  • failing to fulfil some of its regulatory obligations about the use of appropriate accounts software.

They have been required to pay a $20,000 fine for these breaches. Our article dated November 2017 alerted our readers to this business model.

Leverage has a conveyancing arm which deals with a number of consumers. We have had a number of clients who have interviewed Purplebricks to list their property and ultimately not used them. Reason’s given was that they were not aware that the flat fee was paid upfront and not returned if the property didn’t sell. My client’s concern was, “where is their incentive to sell my property? I cannot see how they will work for my property if I pay them everything up front.”

We are in an innovative place in the real estate industry. The advent of places like Purplebricks and other strategies is good, provided that all consumers are aware of the real costs and most importantly the reality of the business model. It was because of this confusion about costs and the lack of knowledge about the program which caused Purplebricks in Queensland to suffer a fine and the indignity of published undertakings. This is not only protection for the consumer, but protection for other businesses.

The Queensland Government have rightly put in place laws which ensure that there is an equal playing ground between competitors. No one should be able to steal an advantage over a competitor by not complying with the law.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.