In Short
- Ensure all advertising statements truthfully describe your products or services. If you advertise a discount, confirm the original price was genuinely charged.
- Disclaimers and fine print must be clear and prominent. They cannot correct an otherwise misleading message.
- Do not make false or misleading claims about your products or services. Be transparent to maintain trust and comply with legal obligations.
Tips for Businesses
Regularly review your advertising materials for accuracy and clarity. Always substantiate claims to avoid misleading consumers and potential legal issues. If unsure, seek legal advice to ensure compliance with the Australian Consumer Law and protect your business from fines or penalties.
For any business, advertising is one of the most crucial tools to
ensure profitability and growth. It is how you notify your
customers of the goods and services you sell and provides them with
a reason to purchase these goods and services. However, whilst
advertising is an essential tool, it is not risk-free. Any business
can risk engaging in
misleading or deceptive conduct through advertising if
they are not careful. This article will discuss how to prevent your
business from engaging in misleading and deceptive advertising.
What is Misleading and Deceptive Conduct?
The Australian Consumer Law (ACL) regulates how businesses provide goods and services to their customers. For instance, under the ACL, you must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Therefore, the obligation is on you as a business owner to avoid misleading and deceiving your customers.
Consider you advertised an internet package with an unlimited download plan. Your customers purchase this plan and later discover that the internet speed begins to slow after using 1000GB of data. Using the term unlimited here could be misleading or deceptive as you had not disclosed this information to the customer.
Misleading and Deceptive Advertising
Under the ACL, the term 'conduct' refers to any marketing or advertising you undertake and any published promotions you use. Additionally, conduct includes anything you say or promise to a customer during trade or commerce. Therefore, you must ensure that you do not mislead or deceive a customer into purchasing a product or service through your:
- advertising;
- promotions; or
- promises.
For example, you cannot advertise a stainless steel knife for $29.99 as 'discounted from $49.99' if you never sold the knife for $49.99. You are misleading your customer by promoting this false sale because the knife had never been sold at the original price.
The recent finding by the Federal Court against a workplace relations advisor is an excellent example of how accepted business advertising practices can lead to a finding of misleading and deceptive conduct. The company used Google Ads to link its advertisements to search terms such as "fair work ombudsman" to promote its business. When consumers would search these terms, they would read ads such as 'Fair Work Ombudsman Help – Free 24/7 Employer Advice' and 'Fair Work Commission Advice – Free Employer Advice.' These ads were found to be misleading, as they led the reader to believe the company was affiliated with a government agency. This was reinforced through the advertising of 'free advice' as government agencies tend to use this kind of wording. The company was ordered to pay a $3 million penalty.
How is Misleading and Deceptive Conduct Determined?
Any ruling on misleading and deceptive conduct will depend on the circumstances of what has occurred. However, there are some key considerations that you should be aware of when evaluating if your advertising can be misleading or deceptive.
Intent is Not a Defence
Lack of intention does not affect whether you have been misleading. For example, if you advertise that the $29.99 knife is made of stainless steel, and you honestly believe this to be true, but the knife is made from cast iron, then you could be misleading your consumers, as they are purchasing the knife under the belief it is made of stainless steel. It does not matter that you did not intend to mislead your customer. Your advertising misled them on the true nature of the good.
A Silence or Omission Can Be Misleading or Deceptive.
Your silence or omission in your advertising can lead to a finding of misleading or deceptive conduct. Consider the example of the internet provider shown above. The advertiser did not notify the client that speed throttling would occur after they used a certain amount of data. This could mislead the consumer into purchasing the product.
Consider the Entire Context
Courts consider the full context of a misleading or deceptive event. So when advertising, you should remember the overall impression your advertising is creating.
Ask yourself, does this total impression mislead or deceive?
The Google ads case from above is an excellent example of this. When considered in its totality, the Court found that Google Ads could mislead a consumer into thinking the company was affiliated with a government body. This finding was based on several factors, such as:
- the wording of the ads; and
- their link to key search terms.
You must review the full context of your advertising to avoid creating an overall impression that is inaccurate or misleading. The Australian Competition and Consumer Commission (ACCC) provides some guidance for businesses regarding this issue. For instance, you should consider whether the overall impression created by your conduct (including advertisements) is false or inaccurate.
How to Avoid Misleading and Deceptive Conduct When Advertising
Be Accurate
Ensure that all the statements and information you use in advertising accurately describe the goods or services advertised.
Consider the knife example from above. When you advertise the knife for $29.99, down from $49.99, make sure that the knife has previously been sold at the original price. Also, ensure that if you advertise the knife as stainless steel, this description is correct.
Avoid Absolute Statements
When writing your advertisements, try to avoid using absolute statements. Although, if you have to use them, you should back them up using recent data or facts. For example, avoid stating that a good or service is 'the best' or 'fastest' unless you have data or evidence to support that fact. As discussed above, whether your advertising is misleading or deceptive relies on the full context of what you have written. If you make a claim using out-of-date information, this could be misleading or deceptive. Also, remember that your intention in using this information may not matter if the result is a misled consumer.
Use Disclaimers
If advertising a promotion, use disclaimers to set out key terms and conditions. For example, consider you run a promotion where your customers can buy two knives and get one free. In this case, ensure you include a disclaimer on how your customer can engage with this promotion. Furthermore, ensure that consumers can easily read any:
- warning;
- qualifications; or
- disclaimers.
Remember that these qualifications or disclaimers must not mislead or deceive the customers.
Guide to Protecting Your Brand
Your business' brand represents your values, identity and reputation. Learn how to create a successful brand and protect it.
Key Takeaways
The ACL provides explicit protections for consumers against businesses misleading or deceiving them. As a business owner, you must be clear about your advertising. However, remember that per the ACL, the intention to mislead and deceive is irrelevant. For instance, when using accepted forms of advertising, such as Google Ads, you may be engaging in misleading and deceptive conduct if you do not heavily review your wording.
Frequently Asked Questions
What type of conduct in advertising can be misleading or deceptive?
Under the ACL, the term 'conduct' refers to any marketing or advertising you undertake and any published promotions you use. Additionally, conduct includes anything you say or promise to a customer during trade or commerce. Therefore, you must ensure you do not mislead or deceive a customer into purchasing a product or service through your advertising, promotions or promises.
What is one way I can avoid misleading customers?
If advertising a promotion, use disclaimers to set out key terms and conditions. For example, consider you run a promotion where your customers can buy two knives and get one free. In this case, ensure you include a disclaimer on how your customer can engage with this promotion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
