False and misleading representations

It’s against the law to make false claims or misleading descriptions:

  • about the supply or possible supply of consumer goods or services
  • when promoting the supply or use of goods or services.

For instance, a business must not make false or misleading representations about:

  • the standard, quality, value or grade of goods or services
  • the composition style, model or history of goods
  • whether the goods are new
  • a particular person agreeing to acquire goods or services
  • testimonials by any person relating to goods or services
  • the sponsorship, approval, performance characteristics, accessories, benefits and uses of goods or services
  • the price of goods or services
  • the availability of repair facilities or spare parts
  • the place of origin of a product - for example, where it was made or assembled
  • a buyer's need for the goods or services
  • any guarantee, warranty or condition on the goods and services.

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: People concerned about their body image may be more vulnerable to claims a product will enhance beauty.

A representation can be misleading even if it is true.

Testimonials

Testimonials are statements from previous customers about their experience with a product or service. They 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.

It’s against the law to make false or misleading testimonials. Misleading testimonials can persuade customers to buy something they shouldn’t or don’t want, based on belief in the testimonial.

Example: A supplier published a newspaper advertisement about a 'nasal delivery system' to treat impotence or erectile dysfunction. The advertisement quoted an interview with a celebrity that falsely claimed he had suffered from impotence and the nasal delivery system had assisted in dealing with this condition.

Sale or grant of an interest in land

A business must not make false or misleading representations about the sale or grant of an interest in land.

They must not:

  • represent that a business has a sponsorship, approval or affiliation when it does not
  • make false or misleading representations about the:
    • nature of the interest in land
    • price, location, characteristics or use that can be made of the land
    • availability of facilities.

Example: A real estate agent could be making a false or misleading representation about a property if they advertised beachfront lots that do not front the beach.

Employment and business activities

It is against the law to make false or misleading representations about the:

  • availability, nature or terms and conditions of employment
  • profitability, risk or other material aspect of any business activity that requires work or investment by a person.

Example: 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.

Offering rebates, gifts, prizes and other free items

It is against the law to offer rebates, gifts, prizes or other free items if you’re not going to provide them. 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: A stereo equipment retailer had a promotion where 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.

Misleading conduct as to the nature of goods and services

A business must not engage in conduct likely to mislead the public about the:

  • nature,
  • manufacturing process,
  • characteristics,
  • suitability for purpose, or
  • quantity of any goods or services.

Example: A tile supplier advertises tiles for sale as being outdoor tiles, even though they become slippery when wet and would clearly be exposed to the elements if laid outdoors.

Unconscionable conduct

Unconscionable conduct is a statement or action so unreasonable it defies good conscience.

A business must not act unconscionably when:

  • selling or supplying goods and services to a consumer
  • supplying or acquiring goods and services to or from a small business.

Examples:

  • not properly explaining the conditions of a contract to a person they know does not speak English or has a learning disability
  • not allowing sufficient time to read an agreement, ask questions or get advice
  • using a friend or relative of the customer to influence the customer’s decision
  • inducing a person to sign a blank or one-sided contract
  • taking advantage of a low-income consumer by making false statements about the real cost of a loan
  • failing to disclose key contractual terms
  • using high pressure tactics, such as refusing to take no for an answer.

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

Bait advertising occurs when a business advertises a product, usually at a discounted price and does not have a reasonable supply of goods taking into account the extent of advertising and the expected consumer response to that advertising.  As the consumer has been drawn into the shop by the ‘attractive’ price, they may often then buy another item at a higher price.

Example: 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.

Wrongly accepting payments for goods or services

Businesses are not allowed to accept payments for goods or services:

  • they do not intend to supply
  • if they know, or should have known, they would not be able to supply the goods or services in a timely manner.

Example: A landscaper contracts to provide yellow paving stones, knowing that only grey paving stones are available at the time of the agreement.

This is not intended to affect businesses who genuinely try to meet supply agreements. A business may avoid prosecution if:

  • the failure to supply was due to something beyond its control, and
  • it exercised due diligence and took reasonable precautions.

Consumer guarantees - guarantees, conditions and warranties

It’s against the law to make false or misleading representations about consumer guarantees.

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