A company selling nasal sprays to treat erection problems used "unconscionable" sales techniques that included warning men their penises could shrink, the Federal Court has found.

The court ruled the Advanced Medical Institute (AMI), known for its high-profile billboards and television advertising, engaged in conduct contrary to the Trade Practices Act and the Australian Consumer Law.

Justice Tony North said patients were signed up to expensive contracts of 12 to 18 months without a proper medical consultation.

"Sales people used high-pressure selling techniques by telling men that their penis would shrink and they would suffer psychological impotence if they did not agree to the treatment," he said.

The men were told they would get a refund if the treatment did not work but were not informed that they had to try all treatment options including self-injections in the base of the penis.

Justice North said there was no scientific basis for the treatment and doctors did not diagnose the cause of erectile dysfunction, which is often associated with cardiovascular disease and diabetes.

"The doctors failed to provide patients with proper care and act in their best interests," he said.

"They failed to meet the standards of proper practice established by the medical profession. The doctors elevated the commercial interests of AMI above the medical interests of the patients."

In the 2009 financial year, customers paid AMI nearly $55 million for its treatments.

Justice North ordered that AMI could offer patients contracts of no more than two months and must include a five-day cooling off period.

Its doctors must also conduct consultations either face-to-face or by video-link.

The judgement of the court was also referred to medical disciplinary bodies.

AMI was ordered to pay the legal costs of the Australian Competition and Consumer Commission.