It is unlawful to make false claims or misleading descriptions:
For instance, your business must not make false or misleading representations
Courts have found false and misleading representations in these cases:
Whether a representation is considered false or misleading will depend on the circumstances of each case. A representation that misleads one group of consumers may not necessarily mislead another group.
Example – 'misleading' depends on circumstances
People concerned about their body image may be more vulnerable to products claiming to enhance beauty.
A representation can be misleading even if it is true. For example, an advertisement falsely claiming a person has benefited from using a product, even though they have never used it. The product may work but the advertisement is still misleading, because the person has never used the product.
It is unlawful to make false or misleading testimonials.
Testimonials are statements from previous customers about their experience with a product or service.
These can give consumers confidence in a product or service on the basis that another person - particularly a celebrity or well-known person - is satisfied with the goods or services.
Misleading representations can persuade customers to buy something to their detriment, based on belief in the testimonial.
Example - false and misleading representations about testimonials
In court, a representation about a testimonial is presumed to be misleading but not false.
A business accused of making a misleading representation has to provide evidence to show it is not.
|TIP - Make sure testimonials are true and correct when using them to endorse products.|
Your business must not make false or misleading representations about the sale or grant of an interest in land.
You must not:
Example – misleading representation about sale of land
A real estate agent would be misrepresenting the characteristics of a property if advertising 'beachfront lots' that do not front the beach.
It is unlawful to make false or misleading representations about the:
Example – misleading representations about employment and business activities
A second-hand truck dealer falsely told buyers they could get employment from certain places if they bought the dealer’s trucks. The truck dealer was found guilty of misleading the buyers and fined.
Legal reference: Wilde v Menville Pty Ltd (1981) 50 FLR; 3 ATPR 40-195
It is unlawful to offer rebates, gifts, prizes or other free items without intending to provide them, or not providing them as offered.
The rebate, gift, prize or other free item must be provided within the specified time or, if no time was specified, within a reasonable time.
Example – misleading representations about a promotion
A stereo equipment retailer held a promotion. Customers went into a draw to win prizes when they bought stereo equipment. The retailer felt the promotion had not been a financial success, so the closing date was extended and fake names were added to the draw. The retailer pleaded guilty and was fined.
Legal reference: TPC v Calderton Corp Pty Ltd (1994) ATPR 41-306
Your business must not engage in conduct likely to mislead the public about the:
of any goods or services.
Example – misleading conduct about the nature of goods
An importer sells bicycle helmets with labels indicating the helmets met a mandatory safety standard, even though the helmets were not tested during manufacture.
Generally, 'unconscionable conduct' is a statement or action so unreasonable it defies good conscience.
Your business must not act unconscionably when:
Examples - unconscionable conduct by a trader
Note: these are examples and not a complete list of unconscionable conduct and sometimes these instances will not be unconscionable – it depends on the circumstances.
'Bait advertising' usually happens when a business advertises goods at a certain price but does not have a reasonable supply for customers to buy, and urges them to buy higher-priced or lower-quality goods.
Example – bait advertising
An electronics retailer runs a major national campaign, advertising 50-inch televisions at a low price of $799 for a week-long sale. The retailer usually sells about 30 televisions of this type every week.
The retailer only stocks two televisions at the advertised price and refuses to take customer orders. When customers attempt to buy the television at the advertised price, they are told it is out of stock and are offered a more expensive unit for $999. This is likely to be bait advertising as the retailer does not have a reasonable supply.
Businesses must not accept payments for goods or services:
Example - Wrongly accepting payment for goods
A landscaper contracts to provide yellow paving stones, knowing that only grey paving stones are available at the time of the agreement.
This part of the law is not intended to affect businesses who genuinely try to meet supply agreements. A business may avoid prosecution if:
'Information providers' include media organisations such as:
They are not subject to misleading and deceptive conduct laws when carrying out the business of providing information.
Example – information providers
A motor car trader who places a misleading advertisement in the a major newspaper is liable for misleading or deceptive conduct statements in the advertisement, but the newspaper publisher is not.
It is unlawful to make false or misleading representations about consumer guarantees.
For more information, visit the consumer guarantees page on the Fair Trading website.
Making false or misleading representations is an offence.
The maximum fine is $220,000 for an individual and $1.1 million for a body corporate. Criminal penalties for the same amount apply.
Before prosecution, fair trading agencies can:
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