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Every business needs to understand their obligations under Australian Consumer Law (ACL). One of the requirements under the ACL is to display the correct advertised price for your goods. In not doing so, you could be in breach of legal regulations as well as create a bad image for your businesses.
Therefore, it’s important to be in line with some key aspects of the ACL. This not only ensures you’re compliant with the law, but it also informs your customers that you are a transparent and trustworthy business.
In this article, we will cover:
- False advertising
- What the Australian Consumer Law is
- Misleading and deceptive conduct
- Complying with fair advertising prices
- Misrepresentation
False Advertising In Australia
False advertising is strictly prohibited by the ACL. This occurs when a statement is completely made up about a particular product or service. It can include false information relating to:
- Whether the item is brand new or second hand
- How and where the product was made
- The quality of the item
- The way a product was made
- The materials or ingredients used in making the item
- Whether it is supported or endorsed by a particular group, organisation or individual
Essentially, anything that leads a consumer to believe something untrue about a product is considered false advertising.
| Example Ben owns a local burger joint. Wanting to adapt to the growing interest in vegan meals, Ben advertises a new burger that is “100% Vegan”. The burger itself is completely vegan aside from the cheese in the burger, which is just normal dairy cheese instead of vegan cheese. Ben’s claim that his new burger is 100% vegan would be considered false advertising and a breach of the ACL. |
What Is The Australian Consumer Law?
The ACL is the main body of law aimed at protecting consumers from unfair business practices.
The provisions of the ACL are in schedule 2 of the Competition and Consumer Act 2010. The ACL covers a number of important point that are relevant to making sure consumers are treated fairly in the economic market, addressing matters such as:
- Unfair contract terms
- Refunds, repairs and exchanges
- Compensation
- Consumer guarantees
- Warranties and liabilities
What Does The ACL Say About Advertised Prices?
The ACL has determined that prices must be labelled in a way that is completely transparent to customers.
This means that the right price must be presented so that it is clear and easy to understand. Some items may also need the unit price – if you’re a grocer, make sure you’re aware and following through on this.
| Example A bookstore is having a sale for the current #1 bestseller. The price is marked at $20, however under it in much smaller writing it says “after spending $30”. At first glance, the book is on sale for $20. However, it is actually only available for that price if a customer spends $30. In this case, the bookstore is potentially in breach of the ACL as they have not clearly marked their prices. |
What Is Misleading And Deceptive Conduct?
Misleading and deceptive conduct are acts, omissions, statements and predictions that deceive a customer into believing something false about a particular product or service. The definition for misleading or deceptive conduct is deliberately broad as it can constitute a wide range of acts.
A statement, nod of the head or any kind of body language can amount to misleading or deceptive conduct (regardless of whether it was intentional or not!)
Therefore, it’s important for businesses to be aware of this and ensure they are actively being transparent and honest with their customers.
| Example Hannah is buying a new mattress for her bed. As she’s extremely sensitive to dust mites, she’s looking for a mattress that is hypoallergenic. At the store, Hannah takes a liking to a particular mattress and asks the sales representative if it is hypoallergenic, explaining her reaction to dust. The sales representative responds by saying, “you won’t have any problems with our mattresses”. Hannah takes this to mean that all the mattresses in the store are hypoallergenic and proceeds to purchase the mattress she likes. A few days later, Hannah comes back to the store, claiming her mattress was triggering her sensitivity to dust and finds out from the store manager the mattress was not, in fact, hypoallergenic. The sales representative’s actions can be considered misleading or deceptive conduct. While not a direct lie, the statement misled Hannah to believe something that wasn’t true about the mattress. |
How Can I Comply With Fair Advertising Practices?
Complying with fair advertising prices is relatively simple – display the correct price clearly and accurately on any items, labels or your businesses website. If there are related promotions to the price, the original price should still be clearly visible in order to avoid confusion.
It’s important to keep in mind that intention doesn’t matter when it comes to advertising prices fairly as well as false or misleading advertisements. If a person can be led to reasonably believe that a certain fact is true about a product, then they have been misled regardless of the intentions of the seller.
Therefore, it’s crucial for businesses to be extremely proactive in making sure they clearly communicate with customers the correct price as well as any other details regarding their products.
This can be done in a number of ways, some of which include:
- Make sure your sales representatives are well trained, aware and prepared
- List any ingredients on the menu or make sure wait staff have them memorised
- Display any and all information about products on your business website, where customers can easily access it
- Be available to customers for communication so they can ask any questions they may have
What Is Misrepresentation?
Misrepresentation is when a customer agrees to enter into a contract, based on false information (remember, agreeing to buy something is entering into a contract).
Misrepresentation is different to other types of false claims, as the definition is somewhat more concise. For misrepresentation to occur, two key elements need to be present:
- The statement was presented as a fact (not an opinion or prediction)
- The consumer purchased the product based on that false statement
There are three types of misrepresentations:
- Innocent: There was never an intention to mislead the consumer
- Negligent: The consumer was misled due to a lack of care in telling the truth
- Fraudulent: There was a deliberate intent to deceive the consumer
In order to avoid any kind of misrepresentation occuring, ensure that all customers that purchase from your business are well informed on what they are buying.
Key Takeaways
Businesses need to take care to ensure their customers have all the information they need before making a purchase or else they could be held responsible. To summarise what we’ve discussed:
- The correct advertised price for goods needs to be clearly displayed, according to the ACL
- Misleading and deceptive conduct is considered illegal, so it’s important to be careful with how you communicate information to customers
- False advertising should never be engaged in
- Misrepresentation can also occur, whether it’s intentional or not
If you would like a consultation on advertising prices correctly, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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