The importance of advertising and product placement has become more apparent than ever to businesses yet there are rules and laws which govern trade practices that businesses must abide by. We’ve all seen the clickbait ads promising to rid you of all your wrinkles, the email from the deceased Nigerian prince who left you a hefty inheritance and the Instagram celebrity who captions that her trim figure was entirely the work of a detox tea.
However there are times when misleading or deceptive conduct isn’t intentional nor direct. Under section 18 of Australian Consumer Law, misleading and deceptive conduct is expressly forbidden and it is illegal for a business to engage in conduct that is likely to mislead. It is important that businesses are aware of what constitutes misleading and deceptive conduct as they may be held liable for damage suffered by a consumer even if they did not intend to mislead or deceive them.
To avoid your business being implicated in misleading or deceptive conduct, we recommend you contact an experienced business lawyer.
Here are 5 examples of misleading or deceptive conduct and the ways in which businesses may be held liable:
Disclaimers and small print
Where a business hides important disclaimers within small print to advertise their product or services, they may not be protected from liability by the disclaimer. If a business intentionally utilises small, unnoticeable placements for their disclaimers or buries them within the small print of their advertisement then they may be liable for misleading or deceptive conduct.
Example: A large electronics store advertised that they were having a 20% storewide sale off all products with a disclaimer hidden in the small print that customers could only claim the discount after they had bought $200 worth of products. The store was found to have engaged in misleading and deceptive conduct as the disclaimer was not prominently displayed and customers could not have known about the additional condition.
Bait advertising and special offers
Businesses often engage in the practice of putting select merchandise on sale for low prices to attract attention and customers.. Bait advertising is legal but it can be misleading and deceptive if the advertised items on sale are not available in reasonable quantities. Businesses must ensure that their advertisement clearly states whether the goods are in limited or short supply and the time limit.
Example: A cosmetics retailer used bait advertising to promote a sale they had on a select brand of lipsticks. They failed to disclose on the advertisement that they only had a limited supply of the lipsticks which they usually sold 10 pieces daily. The retailer was found to have engaged in misleading and deceptive conduct as they did not have a reasonable supply of the advertised lipstick.
Sometimes a business may accidentally advertise an item or service at an incorrect price. When this happens, the business is not obliged to sell their product at the incorrect price but they must withdraw the item or advertisement until they have corrected the price. A business must inform a customer who has placed an order for the item at the incorrect price of the mistake and give them the choice to continue with their order (at the correct price) or cancel it.
Example: An online clothing website mistakenly advertised a t-shirt for $3.00 instead of $30.00. Customers were sent an email stating that there was a pricing error and the amount of $30.00 was deducted from the customer accounts without giving the customers a chance to cancel the order. The website was found guilty of misleading and deceptive conduct.
Silence and withholding of information
Businesses can engage in misleading or deceptive conduct when they fail to provide important information to the consumer regarding the sale. Silence can be illegal where the facts are important details that a consumer ought to know, relevant to whether the consumer will choose to proceed with the transaction and indicate that previous information provided to the consumer was incorrect.
Example: A popular local cafe is for sale. The owner fails to inform potential purchasers that 5 new cafes will soon be opening on the same street. The cafe is found guilty of misleading and deceptive conduct through silence.
If you would like to know more about misleading or deceptive conduct or have experienced an example of misleading or deceptive conduct, LawPath recommends getting in touch with a business lawyer.
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