Vulnerable men suffering sexual dysfunction were told their penis would shrink if they didn't agree to treatments offered by the Advanced Medical Institute, a Melbourne court has heard.
Justice Anthony North has found AMI engaged in unconscionable conduct in its sales pitch, after Federal Court action by the Australian Consumer and Competition Commission against the company, its director Jacov Vaisman and two doctors engaged by AMI.
AMI told customers its nasal spray and oral strips would help men have longer lasting sex, despite having no proper scientific basis to support the claim, Justice North found on Wednesday.
Advertisements said people suffering premature ejaculation (PE) and erectile dysfunction (ED) could "call now and speak to a doctor", but Justice North found would-be customers never underwent a physical medical examination and only briefly talked to a doctor on the phone.
Instead, AMI salespeople told men their penis would shrink and they would suffer psychological impotence if they did not agree to the treatment.
Justice North said it was immoral to use the fears and anxieties of men suffering from ED or PE to sell medical treatments.
"To target the patient's vulnerability in this way is to use an unfair tactic and that is a possible marker of unconscionable conduct."
The men were charged between $2500 and $4500 for the program, and were not properly given information relating to a refund clause in their contract.
In the years between 2008 and 2010, AMI reported revenue of more than $40 million a year.
The company, best known for its targeted advertising campaign including "up your nose and away it goes" and "want longer lasting sex?" has since gone into liquidation.
ACCC chairman Rod Sims said the action was taken because AMI sought to exploit vulnerability for its own commercial gain.
"This case provides a clear message that businesses must not take advantage of consumers who are vulnerable or disadvantaged," Mr Sims said in a statement.
The finding says compensation will be paid to 14 patients treated in 2011, Dr Vaisman will not be able to continue his role in the business of AMI and a number of changes will be added to future contracts.