Misleading and Deceptive Conduct in Advertising

Misleading and Deceptive Conduct in Advertising



Misleading and Deceptive Conduct under the Australian Consumer Law (ACL) in Advertising

Have you wondered how businesses can get away with making statements or claims about their products that seem unrealistic? You may have even bought a product based on what was in some advertising about the characteristics of a product. Most of the time, those statements made by companies are correct, or to an extent correct. Some times however the statements are just wrong and you may have wasted your money buying something that is of no use to you. More concerning is that you may have suffered some damage using a product that doesn’t have the characteristics promised. If that has happened, there are laws to protect you and punish the offending company.

Under the Australian Consumer Law (ACL), consumers are protected against commercial conduct that is misleading or deceptive. Section 18 of the ACL prohibits engaging in conduct that is misleading or deceptive or is likely to mislead or deceive.

When determining if conduct has been misleading or deceptive, the courts will look at whether a reasonable person, who is a member of the class the conduct or representation was made to, would have been misled or deceived. It is irrelevant whether or not the conduct was intentionally misleading or deceptive.

This consumer protection provision can often apply to advertising in the media. Whether in a newspaper, in a pamphlet, on TV or on the radio, claims made in advertising can often amount to misleading and deceptive conduct. Any contracts entered into or purchases made as a result of misleading and deceptive conduct in advertising may be able to be set aside, or damages could be awarded.

An example

A recent High Court case illustrates how the ACL s 18 provision currently works to protect consumers from misleading and deceptive conduct in advertising. TPG’s broadband advertisements were held to breach s 18, as they misled customers as to whether the broadband package price required the purchase of an additional – and more expensive – telephone bundle.

The High Court held that the “general thrust” and “dominant message” chosen by TPG was ultimately misleading. While other parts of the marketing strategy qualified the misleading and deceptive statements, this did not detract from the fact that the main message in TPG’s advertising strategy led a consumer into error.

This means that advertisements can be misleading based on the “dominant message” communicated, even if the misleading or deceptive statement is later clarified, or even found by the consumer to be false. If certain parts of an advertisement are emphasised and likely to lead a consumer into error about their product, these alone can be sufficient. An ordinary and reasonable consumer, for the purposes of the test under s 18, is simply not required to pay close attention to the entirety of an ad.

Additionally, consumers affected by misleading or deceptive conduct are not only those who have entered into legal obligations as a result of the advertisement. Prohibited misleading and deceptive conduct in advertising can occur even when consumers of the targeted class are lured into “the marketing web” and consider the advertising company’s product over that of its competitors due to the misleading and deceptive conduct.

Another recent example involved Nurofen with their targeted pain relief packaging. The ACCC brought action against the company and they received a significant fine for their advertising.

The current position on misleading and deceptive conduct in advertising

The ACL currently works to help safeguard consumers from misleading and deceptive advertising. While advertising often makes claims to induce customers into purchasing products, if these would lead a reasonable person into error about that product there may be a claim under s 18.

The purpose of our Australian Consumer Law is to encourage accurately informed purchases and commercial transactions. If you feel you were not adequately informed, and that you may have fallen victim to misleading advertising as a result, contact us to discuss your situation and any options you may have.

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