As a business owner, you have the primary accountability to ensure that you abide by the Australian Consumer Law and are not, in any way, misleading your customers to achieve more sales. As per the Australian Consumer Law (ACL), in trade or commerce, as a business owner, you must not engage in conduct that is or is likely to be misleading or deceptive. If you mislead someone, even without intention, in the course of operating your business’s price, value, goods or services, you are likely in breach of the ACL.
Misleading or deceptive conduct refers to behaviour that is intended to mislead or deceive others in a way that affects their business or personal decisions. This conduct can take form throughout various contexts of advertising, marketing and sales. For example, false advertising represents a product or service, whether it be its quality, price, or availability, in a misleading way. This type of conduct is illegal and can result in serious consequences, including fines and even imprisonment.
What are some examples of misleading or deceptive conduct?
Let us explore some common examples of misleading or deceptive conduct in which businesses may be held liable.
1. Fake Reviews and Testimonials – These are statements from previous customers about their experience with a product or service. Fake ones can persuade customers and give them confidence to buy something as a result of a false impression.
2. Predictions and Promises – A business should not make unreasonable promises they cannot keep. A statement about the future can be misleading or deceptive if the business making the claim knew it was false, did not care whether it was true or not, or had no reasonable grounds for making it.
3. Disclaimers and Small Print – Businesses usually use small print when stating their terms, conditions and disclaimers. Sometimes, however, this print may not be noticeable or prominent enough in the advertisement.
4. Withholding Information – When businesses fail to provide important information to people regarding their business, it can impact their customers’ mindset and impression when considering a product or service. Silence will be misleading or deceptive when a person would reasonably expect someone to disclose the information.
How is misleading or deceptive conduct determined by the courts?
The determination of whether conduct is misleading or deceptive is made by the courts on a case-by-case basis. In general, the courts will consider the overall impression that the conduct creates, as well as the specific representations or omissions that were made.
For example, in order to prove that conduct is misleading or deceptive, it must be shown that the conduct was intended to mislead or deceive others and that it actually did so. Additionally, the conduct must have had a significant impact on the business or personal decisions of others.
What are the penalties?
The specific penalties will depend on the nature and severity of the conduct, as well as the circumstances surrounding the case. The penalties under the ACL for misleading or deceptive conduct can be severe, and can lead to:
- Hefty compensation orders
- Awards in damages against
- Disqualification from operating a business
The Australian Consumer Law prohibits you from engaging in misleading or deceptive conduct in the course of trade or commerce, and it is your responsibility as a business owner to ensure that you abide by these rules. To avoid being misleading or deceptive, it is important to be transparent and honest in all business dealings. This includes being truthful in advertisements, marketing materials, and sales practices. Additionally, it is important to provide accurate and complete information to consumers and to clearly disclose any limitations or restrictions that may apply to a product or service. You can also visit the Australian Competition and Consumer Commission (ACCC) website for more information.
If you require assistance with determining whether your business is compliant with the ACL or not, our experienced solicitors from our sister company, Legal Kitz can help you. Legal Kitz can help in tailoring a solution to resolve any matters arising related to misleading and deceptive conduct. To arrange a FREE consultation with one of their highly experienced solicitors, click here today, or contact us at email@example.com or 1300 988 954.