A large number of Australian companies are being harassed by shady digital operators who largely evade punishment because pursuing them is too much of a “headache”.

Small Business Ombudsman Kate Carnell and other industry leaders are calling for stricter regulation in the digital marketing industry, compared to the repeat offender “wild west”, including through a binding code of conduct similar to that between supermarkets and dairy producers.

Carnell calls on the Australian Competition and Consumer Commission (ACCC) to investigate predatory practices in the industry in response to a wave of horror stories amid the e-commerce explosion during the COVID-19 pandemic.

Sarah Hadgkiss, founder of the luxury nightwear brand Aruke, has been stabbed multiple times.

In one case, she paid a woman living in the United States over six weeks to run all of her social media including Pinterest, Facebook, and Instagram.

“I actually didn’t make any sales in that six week period,” Ms. Hadgkiss said. “In the end, she said, ‘Can you please leave me another five-star rating?’ I’ve just closed the book and moved on. “

Her second experience was with a local digital marketing agency that also had numerous five-star ratings online, but again achieved “zero results”.

The company was hired to provide search engine optimization (SEO) and Google advertising support for Ms. Hadgkiss’ young brand.

Weeks passed with no sales, but she received a number of “useless” reports on audience demographics.

“I asked why there is no specific information and what we can expect in the future, but I did not get a real answer,” she said.

But when she started searching for her own keywords online to see what she paid for, she was told, “Don’t Google your own ads, you’ll hurt the ads”.

Ms. Hadgkiss canceled her contract and asked for a refund, but the company refused.

She considered “moving on” but had just had a baby. “Even though I would have wanted it, it’s just one more extra thing I would have to wear,” she said.

“That’s why they get away with things – people just think, what a headache.”

Oscar de Vries, founder of the online male grooming company Oscar Razor, was also stabbed for thousands of dollars in various incidents.

“A local (charged) $ 2000 to create a website,” he said.

“I paid half the money. It should have been a giveaway when he asked me to pay him with Western Union if he works in Byron Bay. “

The man never produced any work for payment.

When Mr. de Vries looked at him, it was found that he was “touring the world on a surfing tour” and funded his trips through fleeting deals.

“Every time you deal with someone like a freelancer or a contractor, you need to do your research,” he said. “It doesn’t matter how persuasive they are, google them, just check out some of their work.”

Ms. Carnell urged small businesses to share their SEO horror stories in 2019 to convince the ACCC to take a closer look at the industry.

But it goes without saying that the effort subsided when too few came forward.

Sagar Sethi, founder of the Melbourne digital advertising agency Xugar, says the scale of the problem is “much bigger” than people understand because so few companies are willing to file complaints or take action.

“We hear similar stories at least twice a day, it’s got to be that bad,” he said.

“Digital marketing is still the wild west.”

Mr. Sethi said the worst example he saw was a few months ago.

“One of the largest companies in Melbourne was now running an SEO campaign for one of our clients,” he said.

“The company that does the search engine optimization didn’t even know the client’s website was hacked. When people clicked on the website, they only got shady images.”

Another small business client had paid an agency over $ 1000 a month for a year without affecting Google search rankings.

“More than $ 12,000 for nothing,” Sethi said.

He argues that the biggest change that is needed is more transparency “from day one” in any contract. That said, instead of making high, vague promises about sales results, the company providing the service should instead clearly outline what action it will take.

“We break it down into monthly or fortnightly results,” Sethi said.

“We say (customers): ‘We don’t promise you any sales. You pay us to go out of the way not to magically turn your business into a money printing machine. ‘“

Ms. Carnell said the digital marketing industry in Australia is full of “real charlatans” fooling companies with unrealistic promises and unfair contracts.

She said her office or government counterparts handled “a really small number” of such cases and could “put a little pressure on the companies” to force them to mediate, but “I think most of them pay just”.

“The courts are not an option because the sums of money are not large enough to warrant a lawsuit. As a result, these companies tend to get away with fancy promises that are not kept,” she said.

“The ACCC can investigate these companies if they commit misleading and misleading behavior, and they likely are, the problem is getting enough evidence.”

The watchdog has the capacity to bring about 25 cases to court per year and the problem in digital marketing and SEO is “systemic”.

“It’s not just a bad player, there are a lot of charlatans in this room,” she said.

For this reason, the Small Business Ombudsman wants a binding code of conduct for the industry that includes arbitration, not just mediation – which only works if both parties agree.

“The Dairy Code has arbitration, as does the Food and Grocery Code,” said Ms. Carnell. “(It gives us) more teeth.”

Ms. Carnell said her office had “early” discussions with the ACCC and “a number of players in the room”.

She said the watchdog “hasn’t moved as fast as I would like” but “to be fair, they have a thing or two on their plate”.

It’s “certainly on the agenda” this year, and she hopes some kind of code will be in place within a year or two.

“We want to see that – two years is enough,” she said.

“These things take time, there have to be consultations, and also the ACCC and the government in general need to be confident that there is a need – but I think the reality is becoming more apparent moment by moment.”

The ACCC was asked to comment.

However, Mr de Vries is not in favor of stronger regulation.

He believes it is a case of buyer caution.

“We’re all grown up,” he said. “There are risks involved in doing business. If you don’t accept that you’ll never do business. You have to be aware, just like when you are crossing the street. “

frank.chung@news.com.au