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.
Truthful advertising is good for your business reputation but there are also laws against making false or misleading representations. 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.
The Australian Consumer Law (ACL) prohibits your business from making false or misleading representations
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 law 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.
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. However, you have the right not to sell the items at all.
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.
Under the law, 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.
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.
For laws about advertising credit, go to the Offering credit page on the NSW Fair Trading website.
When a business operates under a name other than that of the proprietor, that name must be registered under the Business Names Registration Act 2011 (Cth). Business names are administered by the Australian Securities and Investments Commission (ASIC).
For more information about business names visit the Business names section on ASIC’s website at www.asic.gov.au or call ASIC on 1300 300 630.
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.
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.
The licensee’s name and licence number must be shown in advertisements. If the licensee has a business name registered under the Business Names Registration Act 2011 (Cth) in respect of work to which the licence applies, that name can be included instead of the licensee’s.
This applies to all residential building work where the reasonable market cost of the work to be done (labour and materials) exceeds $1,000 (including GST). It also applies to specialist work (regardless of cost) including plumbing, gasfitting, electrical wiring, refrigeration and air conditioning work.
Check that advertisements include the:
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.adstandards.com.au
Publishers of advertisements have certain obligations under the law when publishing advertisements relating to specific industries. Refer to the guidelines on the Fair Trading website for media advertising staff below relevant to the industries you deal with:
Get a free copy of Adobe Acrobat Reader so you can access PDF versions of our information.