Dispute Resolution & Litigation team, Cullen Macleod Lawyers
We’ve recently seen big businesses like Coles and Woolworths in the news for potentially misleading and deceiving consumers. The laws that prohibit misleading and deceptive conduct are a key protection under the Australian Consumer Law. Put simply, misleading or deceptive conduct means behaviour that could cause someone to fall into error about your business or its products or services. The rules are designed to protect consumers.
What the Law Covers
The law covers most business activities, from advertising and sales to pricing and promotions. It doesn’t just cover what you say, it can sometimes cover what you do or don’t say (by silence). The law doesn’t consider whether you intended to mislead or deceive someone, it just looks at the effect your actions or statements have. So, if something you do or communicate could lead someone to draw the wrong conclusion it might breach the law.
Some common examples of misleading and deceptive conduct that could affect you include:
1. False or Inaccurate Advertising
If your advertising has statements that aren’t true or give the wrong impression, this may breach the law. This includes:
- Wrong prices or savings that never existed.
- Using images of products that aren’t accurate.
- Leaving out information that may be relevant; or
- Providing confusing statistics or data.
Generally, there is some leeway for a little ‘puffery’ where it’s unlikely to mislead or deceive anyone. For example, if your business has a sign that says, ‘The best service in Perth’.
2. Misleading Comparisons
Comparing your products or services to competitors in a way that creates a false impression can be misleading, for example, implying your product is better than a competitor’s product without evidence.
3. Hiding Information in Fine Print
Sometimes the main statement in an advertisement might be technically true but crucial details are buried in fine print. While fine print is often used to protect businesses, the court will look at the overall impression someone could have and whether it is false or deceptive.
4. Silence or Omission
Not saying something can also be misleading if it could lead someone to form a wrong view. For example, if a service has extra costs not mentioned upfront it could be misleading.
5. Promises Without Basis
If you make promises about big profits or future performance that you don’t have evidence for, this can be considered misleading.
Who Can Be Affected?
Many interactions you have as part of your business with consumers are covered.
When considering whether something is likely to be misleading or deceptive, the court will consider who the intended audience of the communication was and how they would interpret the information. So, if your audience is someone with technical knowledge in a specific area the court will consider what someone with that expertise may think, which may be different to a member of the public.
Why It Matters
Breaching these laws can have serious consequences even if your business made an honest mistake. Regulators like the Australian Competition and Consumer Commission can investigate claims of misleading and deceptive conduct. Affected businesses or consumers can also take legal action. A court could order you to stop doing certain things, ask you to pay compensation or order you to correct misleading information. In some circumstances you could even be disqualified from running a business.
Staying Clear of Misleading Practices
To avoid accidentally misleading others:
- Be accurate and clear in all advertising and communication.
- Don’t overstate benefits or hide important facts in fine print.
- Base claims on evidence and reasonable grounds; and
- Review your sales and promotional material regularly to ensure it matches what you provide.
If you would like any help reviewing your promotional material, ensuring your employees are appropriately trained or would like advice, get in touch with Cullen Macleod, we’d be happy to help.
