Advertising can be very effective in reaching potential customers and showing them what you have to offer. When advertising, you should be aware of how to reach your audience cost effectively and be aware of the laws that regulate advertising.

Analyse your potential customers’ demographics or characteristics, their media preferences and what they might be doing that would make them notice your advertisement. Target your advertising to cost effectively reach potential customers rather than paying a lot to reach large numbers of people who will never be customers. Advertising media options include print (newspapers, magazines), radio, television, Internet, display (posters, billboards), direct mail (flyers in the mailbox), and sponsorship (eg. having your logo on a football team jumper). Don’t blow your entire advertising budget on one expensive ad. Try to find ways to stretch your dollar over a period of time. A TV or radio ad is probably not the best option for a new business unless you can afford it.

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Truthful advertising is good for your business reputation but there are also laws against making false claims. Some may think that truth and advertising is a contradiction in terms, but a well-informed customer is a satisfied customer and your best advertisement.

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Section 44 of the Fair Trading Act 1987 makes it a criminal offence to falsely represent that:

• goods are of a particular standard, quality, value, grade, composition, style or model or have a particular history or previous use
• services are of a particular standard, quality, value or grade
• goods are as new if they are used
• goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have
• a person has a sponsorship, approval or affiliation they do not have.

Under the Act it is also a criminal offence to mislead customers about the:

• price of goods or services
• availability of facilities for the repair of goods or of spare parts for goods
• place of origin of goods
• need for any goods or services
• existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.

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If you include the price of a product in an advertisement, you must tell consumers the full cash price required to be paid in order to buy the product. Falsely raising customers’ expectations by telling them only part of the price of an item can lead to disappointment for the customer and can damage your reputation.

The Fair Trading Act makes it an offence to state only part of the price without also specifying the total amount to be paid. The full price includes any applicable GST. For more information on GST pricing see the brochure entitled All-inclusive pricing & the GST available on the ACCC website at www.accc.gov.au

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Attaching more than one price to goods can mislead your customers. Whenever an item has more than one price marked on it, it is an offence to sell it for more than the lowest marked price.

It is also an offence to falsely inflate the price of goods to give the impression that they have been discounted or are on ‘sale’. This means you cannot advertise that goods were previously sold at a higher price unless they were actually sold at that price for a reasonable time.

Where two prices are attached you have the right not to sell the items at all, but by selling them only at the higher price, you are committing an offence. Under the Fair Trading Act, the price may be applied to a good, fixed to the good itself, a shelf label, coded into a computerised cash register or listed in a current catalogue or advertisement.

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Bait and switch advertising involves advertising a small number of goods at low prices to entice customers to your business. When the advertised goods quickly run out, customers are switched to higher-priced goods.

It is an offence to advertise goods for sale knowing that you will be unable to supply those goods for a reasonable period. You are responsible for ensuring that there are enough supplies available to cover a sale. You still may not be able to meet the demand during a sale but you should have at least planned for it and have reasonable stock or offers available. This is not just common sense, it’s the law.

What is reasonable will depend on the type of product, the context of any advertisement and your previous trading experience. The period of offer should also be made clear in the advertisement.

If an offer is available for a limited period then put this in the advertisement. If stocks are genuinely limited, such as a clearance sale, say so in the advertisement.

When you can’t meet the demand, you may offer to supply the advertised item to customers at a later date eg. a ‘raincheck’. This generally avoids customer dissatisfaction as well as indicating that the advertising was genuine. Alternatively, you can supply equivalent goods immediately and at the advertised price if the customer accepts.

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For laws about advertising credit, go to the Offering credit page.

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Under the law, it is an offence to give false and misleading information on jobs or business ventures that operate from home, require work or require money to be invested.

The law aims to stop the fly-by-night operators who make a quick buck from arranging so-called “business opportunities” with little care about the likely success of the ventures they are promoting.

Typical bogus advertising targets include:

• commission only agents
• trainee salespersons
• door-to-door salespersons
• telephone canvassers
• modelling and theatrical positions
• training courses eg. bar training, beautician training, nanny training.

A common example is the Envelope Stuffing Scam. Readers of an advertisement with the headline, “Would you stuff 1000 envelopes for $1000”, were offered a ‘Complete Home Mailer Program’ at a cost of $189. However, rather than receiving supplies of paper and envelopes, respondents were sent information on how to operate a mail order business similar to the one which had just duped them.

Another example is the Computer Software Swindle. People responding to an advertisement offering ‘money making software’, received a computer disk of business reports for $49.90. However, the promotion mainly consisted of information on how to copy and sell the disk to other users.

The Courts have ruled that what matters is whether a job or business opportunity advertisement will mislead the average person in the street. A breach of the law does not depend on whether the advertiser or promoter intends to mislead. Rather, it is whether they do mislead or are likely to mislead.

Also be aware that leaving out significant information can cause you problems. This is often a key feature of misleading job ads and is regarded as misleading by the Courts.

Prospective employers and employment agencies must ensure that advertisements for job offers are expressed in clear, accurate and definite terms. If a job offer appears too good to be true, it generally is!

To assist the media in ensuring the classified advertising appearing in their publications complies with consumer protection laws, Fair Trading has produced an advertising checklist.

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Some people may take offence or be upset with certain ads, so be careful about what you say and how you say it.

Advertising Standards Bureau Ltd administers a national voluntary system of advertising self-regulation through the Advertising Standards Board and Advertising Claims Board.

The Advertising Standards Board provides a free public service in complaint resolution. It provides determinations on complaints about any form of advertising in relation to issues including the use of language and the discriminatory portrayal of people, concern for children, portrayals of violence, sex, sexuality and nudity, and health and safety.

The Advertising Claims Board provides a competitive complaint resolution service. It is designed to determine complaints issues of truth, accuracy and legality of advertising on a user pays cost recovery basis.

You can contact the Advertising Standards Bureau on (02) 6262 9822.
Web site: www.advertisingstandardsbureau.com.au

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