Generally, having honest advertising practices is good for your business and required by law. In fact, the Australian Consumer Law (ACL) has a number of rules businesses must follow when advertising and selling products and services through television, radio, the internet or print media. This ensures your customers are well-informed, and your business complies with the law.
If you have questions about the law or need advice on your current business advertising practices, it is recommended you contact an expert business lawyer.
Below are five advertising practices the Australian Competition and Consumer Commission (ACCC) confirms are acceptable so long as the business acts reasonably within their rights and obligations and within the limits of the ACL.
5 Advertising Techniques Businesses Can Use
1. Bait Advertising and Special Offers
According to the ACCC, bait advertising can be a legitimate form of advertising. However, it is illegal under Competition and Consumer Act 2010 (Cth) to engage in bait advertising if goods or services are advertised for sale at a discounted price, and they are either:
- not available in reasonable quantities; or
- for a reasonable period at that price.
In order to avoid a claim against your business, it is prudent to clearly state if the good is in short supply or on sale for a limited time. For example, by inserting sentences into your advertisement such as ‘Goods are available at discount price for today only’. Further, be aware you may be required to offer a ‘rain check’ if it is unlikely the good will be available at the advertised price. A ‘rain check’ may circumvent the possibility of you breaching the ACL. For example, you are running a campaign advertising Apple laptops are on sale for the price of $500 during the weekend. If customers arrive and you tell them it is out of stock and offered a more expensive laptop, this is unacceptable conduct.
2. Offering Rebates, Gifts or Redemptions
If your business offers rebates, gifts, prizes or other free items without intending to provide them, it is an unlawful promotional practice under the Act. Similarly, it is unlawful to fail to provide them as promised. If you choose to use this advertising technique, you must ensure the rebate or gift is provided within the specified time or reasonable time (if no time was specified). Do keep in mind you should pay attention to what your business will offer as well. For example, if you are giving customers an opportunity to enter a competition you are running if they spend a certain amount in one transaction. You are required to actually award the prize to a customer, rather than a fictitious person.
3. Cash Back Offers
Basically, cash back offers are a form of discounting where businesses mark down product prices, and manufacturers and retailers maintain the price but offer to return some of the consumer’s money after purchase. For example, you are selling a printer with the words ‘$50 Cash Back’. A customer makes a purchase based on the cash back offer. When the customer returns home, they discover there are conditions. The offer only applies if the person combines the printer with a specific batch of ink and, to their dismay, the offer expired a week earlier.
In this instance, the ACCC may view the consumer has been misled and may not have made the purchase if the cash back offer did not exist. Therefore, you should take care in communicating clearly to the consumer before the purchase any conditions, limitations or restrictions that are in place.
4. Comparative Advertising
Businesses use comparative advertising to directly promote the superiority of their products over another, such as price, quality, range or volume. Take heed when choosing this advertising technique. You must perform checks prior to promoting your product. For example, ask yourself:
- Is the comparison accurate?
- Are the products or services being compared reasonably similar?
- Will the comparison be valid for the life of the promotion?
Finally, you should make considerations about the duration of the advertisement and the reaction of the competitors to avoid your campaign being labelled misleading.
5. Search Engines and Online Advertisements
Lastly, your business may use mechanisms such as ‘AdSense’, ‘AdWords’ banner ads, pop-up ads and other types of advertisements. Be aware a claim can be brought against online ads if they are false or misleading. Consider a real case study involving the Google search engine in the late 2000s. An advertising agency operated an advertising account with Google. The agency’s staff member used a ‘keyword’ of a magazine that was a competitor’s for that account. A Google search for the competitor magazine resulted in a sponsored link that listed the name of competitor magazine with the website address of the classified ads business below it. The Federal Court found the business engaged in misleading or deceptive conduct. Therefore, businesses must be careful not to mislead or deceive customers when placing advertisements on search engines.
Before you advertise your business’ goods or services, it is important you familiarise yourself with these advertising rules and laws. This will lead to customer satisfaction and a successful business.
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