What is misleading or deceptive conduct?
Business conduct is likely to break the law if it creates a misleading overall impression towards the intended audience about the price, value or quality of consumer goods or services.
Whether a business intends to mislead or deceive is irrelevant; what matters is how their statements and actions, the business conduct, affect the thoughts and beliefs of a consumer.
Is puffery misleading or deceptive?
Puffery is wildly exaggerated, fancy or vague claims that no reasonable person could possibly treat seriously.
For example, a café owner claims to make the best coffee in the world or another business says all your dreams will come true if you use a certain product.
There is no legal distinction between puffery and misleading or deceptive conduct.
A business can break the law if it fails to disclose relevant facts to you. Silence can be misleading or deceptive when:
- one person fails to alert another to facts known only to them, and the facts are relevant to the decision
- important details a person should know are not conveyed to them
- a change in circumstance meant information already provided was incorrect.
Whether silence is misleading or deceptive will depend on the circumstances of each case.
Example: A consumer who lives in a regional area is buying a mobile phone. The phone salesperson knows where the consumer lives but fails to tell them that the coverage is poor in that area.
Relying on disclaimers and small print
A business cannot rely on disclaimers and small print as an excuse for misleading or deceptive conduct.
Example: A large department store engaged in misleading conduct when it advertised '25 percent off all clothing' but in small print excluded certain clothing and stated '15-40 percent off housewares'. A court said this was misleading conduct.
With this in mind, you cannot ignore disclaimers. Prominently displaying disclaimers may be enough to protect a business, depending on the circumstances.
Example: A bank advertises low credit card interest rates for the first 12 months. The advertisement clearly indicates the low rates are only available to new customers who apply within a certain period. This disclaimer is enough because it clearly informs consumers about the terms and conditions.
Predictions and opinions
A statement about the future that does not turn out to be true is not necessarily misleading or deceptive.
But promises, opinions and predictions can be misleading or deceptive if the person making the statement:
- knew it was false
- did not care whether it was true or not
- had no reasonable grounds for making it.
Example: a real estate agency was selling apartments with a view of the sea. The agency assured prospective buyers that the view was protected because the land between the apartment block and the sea was zoned for low-rise development. This was based on information provided by a council officer. But the council officer was wrong. The zoning was about to change, allowing high-rise development. The agency had made a false statement about a future matter but had reasonable grounds for making these statement, so was not liable for misleading consumers.