Australian Consumer Law Misrepresentation: What Businesses Must Know

When you’re running a business in Australia, honesty isn’t just good practice - it’s the law. The Australian Consumer Law (ACL) sets strict rules about how you market, price and sell your products and services, and how you handle customer communications day to day.

Misrepresentation under the ACL isn’t limited to outright lies. Even careless statements, half-truths, or silence about something important can amount to “misleading or deceptive conduct.” That can mean serious consequences, from consumer refunds to penalties and corrective advertising.

In this guide, we’ll unpack what counts as misrepresentation, the key legal rules that apply to everyday business activities, and practical steps to reduce your risk. Our aim is to help you stay compliant and build trust with your customers - so you can focus on growing your business with confidence.

What Is Misrepresentation Under Australian Consumer Law?

Misrepresentation means creating a false impression that influences a consumer’s decision about your goods or services. Under the ACL (which sits in Schedule 2 to the Competition and Consumer Act 2010 (Cth)), the core rule is that you must not engage in conduct that is misleading or deceptive, or likely to mislead or deceive.

This overarching rule is found in section 18 of the ACL. It applies to any person or business engaged in trade or commerce, whether you’re a sole trader, a startup or a large company - and it applies regardless of whether you intended to mislead anyone. The focus is on the overall impression your conduct creates.

For a deeper dive into the legal test and how courts assess “overall impression,” it’s worth understanding section 18 of the ACL and the common elements of misleading or deceptive conduct.

It’s About the Overall Impression

Courts look at how a reasonable member of your audience would understand your message. This includes your words, images, layout, tone and context - and even what you leave out. The test is practical and fact-specific: If your conduct creates a wrong impression, that’s a problem, even if each sentence is technically true when read in isolation.

Silence and Omissions Can Mislead

You don’t have to say something false to mislead. If you know information that would materially affect a customer’s decision and you remain silent (or bury it in fine print), that can be misleading. Examples include omitting mandatory fees from the advertised price or failing to disclose material limitations on “unlimited” offers.

Future Statements Need Reasonable Grounds

Statements about future matters (for example, “this investment will generate 10% returns” or “delivery within three business days”) require reasonable grounds at the time you make them. If you don’t have reasonable grounds, the statement can be taken to be misleading. Keep records that show what you relied on when making forward-looking claims.

What Conduct Usually Triggers ACL Misrepresentation Issues?

Most businesses don’t set out to mislead customers. Problems often arise from rushed marketing, out-of-date web pages, or sales scripts that overpromise. Here are common risk areas to watch:

Pricing And “Was/Now” Claims

• Advertising a “sale” price that was not a genuine previous price (e.g. “Was $199, now $99” when the product was rarely or never sold at $199).
• Using “drip pricing” - promoting a headline price and adding mandatory fees late in the checkout process.

Transparent pricing is non-negotiable. If you’re promoting discounts or comparative pricing, ensure your price representations are accurate and in line with Australian advertised price laws.

Performance, Quality And “Typical Results”

• Claiming benefits you can’t substantiate (“guaranteed results,” “fastest on the market,” “cures acne”).
• Testimonials that imply unusual results are typical, or endorsements that aren’t genuine.
• Suggesting goods are of a particular standard, composition or origin (e.g. “Australian made”) when they are not.

Objective claims should be backed by evidence. If results vary, be clear about what customers can reasonably expect.

“Unlimited,” “Free” And Conditional Offers

• Using “unlimited” while imposing undisclosed caps or “fair use” limits.
• Describing add-ons as “free” if the overall price is inflated to cover them.
• Offering money-back guarantees but adding hurdles that make the promise illusory.

If an offer comes with conditions, make the key limitations clear and prominent. Avoid relying on fine print to correct a bold headline.

Implied Affiliations And Endorsements

• Using logos, “as seen in” claims or influencer content that implies endorsement where no official relationship exists.
• Creating a visual impression that your website, product or event is affiliated with a brand, charity or government body when it isn’t.

Be especially careful with co-branding, user-generated content and social media. You’re responsible for the overall impression your marketing creates.

False Or Misleading Representations: Specific ACL Rules You Must Not Breach

The ACL doesn’t stop at the broad “don’t mislead” rule. It also sets out specific prohibitions (including section 29) against making certain kinds of false or misleading representations in trade or commerce. You must not, for example:

• Misstate that goods are of a particular standard, quality, value, grade, composition, style or model when they’re not.
• Suggest goods are new if they’re used, refurbished or seconds.
• Misrepresent a product’s origin (e.g. “Made in Australia” when it isn’t).
• Make false claims about sponsorship, approval, performance characteristics, accessories, uses or benefits.
• Mislead about price, including by hiding non-optional charges until late in the purchase process.
• Make misleading statements about the availability of spare parts, repair facilities or the need for replacements.

These are just examples. If you advertise or sell to consumers, it’s sensible to get across the detail in section 29 of the ACL and related provisions.

What Happens If You Breach The ACL? Remedies, Penalties And Enforcement

The Australian Competition and Consumer Commission (ACCC) and state/territory consumer agencies actively enforce the ACL. Depending on the conduct, outcomes can include negotiated undertakings, infringement notices, court proceedings and public corrective actions.

Remedies For Consumers And Competitors

• Compensation for loss or damage caused by misleading conduct (commonly pursued under section 236 of the ACL).
• Injunctions to stop the conduct.
• Corrective advertising or statements.
• Contract variations or rescission in appropriate cases.

Penalties And Court Orders

Civil pecuniary penalties can be significant for contraventions of the specific false representation provisions (such as section 29). Courts can also order compliance programs, staff training and enhanced record-keeping.

Importantly, there’s no general “defence” to section 18’s core rule. Good intentions, disclaimers in tiny print or a lack of complaints won’t excuse misleading conduct. Taking reasonable care may be relevant to how a regulator responds and, in some contexts, to penalties - but it won’t convert misleading conduct into lawful conduct.

Who’s Responsible?

Responsibility isn’t limited to a single person. A business can be liable for the conduct of its employees and agents. Individuals (including directors and managers) may also face consequences if they were knowingly concerned in a contravention or personally made false representations.

How To Reduce ACL Misrepresentation Risk Day-To-Day

You don’t need to be a lawyer to build good ACL hygiene into your business. A few habits and clear processes go a long way.

Build A “Truth-First” Marketing Workflow

• Fact-check claims before publishing. If a claim is objective (“fastest,” “most durable,” “100% success rate”), get the evidence and keep it on file.
• Sense-check the overall impression. Step back and ask: would a reasonable customer likely take away anything inaccurate?
• Keep content current. Assign responsibility for promptly updating prices, features, availability and time-limited offers.
• Use disclaimers and qualifications to clarify, not to contradict. Key conditions should be clearly and prominently presented near the claim.

Price Transparently

• Display total prices where practical, and never hide unavoidable fees.
• Ensure “was/now” or “save $X” claims reflect genuine previous prices and real savings.
• If you use subscriptions or auto-renewals, make renewal timing, ongoing costs and cancellation terms unmissable.

Handle Reviews, Endorsements And Testimonials With Care

• Don’t publish reviews that you know (or should know) are fake or incentivised without disclosure.
• Ensure influencer content is clearly identified as advertising where required, and avoid implying official endorsement if there isn’t one.
• If results vary, be upfront about typical outcomes.

Train Your Team

• Give sales and customer service staff clear scripts and boundaries. Overpromising on a call or in-store can be as risky as a misleading ad.
• Provide regular training on what counts as misleading conduct and how to escalate uncertain claims for sign-off.
• Record key decisions and approvals - good records help demonstrate diligence if questions arise.

Strengthen Your Website And Policies

• Set clear, customer-friendly online terms that explain how you sell, deliver and handle issues such as refunds. For ecommerce, well-drafted Website Terms and Conditions support transparent trading.
• If you offer express warranties or promises beyond the automatic consumer guarantees, a tailored Warranties Against Defects Policy helps you set expectations lawfully.
• Use a Disclaimer to clarify scope and limitations (for example, where results depend on user behaviour), noting that disclaimers can’t cure otherwise misleading conduct.

Be Thoughtful About Data And Marketing

If you collect personal information (for example, through online checkout or newsletters), you need to handle it lawfully under Australian privacy laws. Many small businesses choose to publish a clear, user-friendly Privacy Policy to build trust and explain data practices. Some businesses are legally required to have one - for example, if they are covered by the Privacy Act because they meet the definition of an APP entity or operate in certain sectors - so it’s wise to check your position and put good practices in place from day one.

If you send promotional emails or run subscriber lists, make sure your campaigns comply with consent rules and unsubscribe requirements alongside the ACL - our overview of email marketing laws walks through the basics.

Helpful Legal Documents To Support ACL Compliance

Clear, well-drafted documents don’t just reduce disputes - they also help your team say the right thing, every time. Depending on your business model, consider putting these in place:

• Customer Contract: Defines your service scope, inclusions and exclusions, deliverables, fees and timelines in plain English, so there’s less room for misunderstandings.
• Website Terms and Conditions: Sets the rules for buying from your site - ordering, pricing, delivery, risk, returns and limitations - aligned with consumer guarantees.
• Warranties Against Defects Policy: If you offer your own repair/replace guarantees beyond the ACL, this ensures your wording meets mandatory requirements.
• Disclaimer: Clarifies assumptions, dependencies or user responsibilities (useful for advice, training or results-based services).
• Privacy Policy: Explains how you collect, use and store personal information. Even when not strictly required, it’s a strong trust signal and good practice.
• Competition Terms & Conditions: If you run giveaways or promotions, clear T&Cs help prevent misleading impressions about entry, chances and prizes.

Getting these documents tailored to your operations helps align your marketing promises with your legal obligations and day-to-day processes.

Responding To Complaints And ACCC Attention

Despite your best efforts, issues can arise. What matters next is how quickly and transparently you respond.

Have A Clear Complaints Process

• Acknowledge concerns promptly and professionally.
• Explain next steps and timelines for resolution.
• Offer practical remedies where appropriate (refund, repair, replacement), consistent with consumer guarantees.
• Escalate recurring issues to your leadership team so you can fix the root cause (marketing claims, product specs, staff training, etc.).

If Regulators Get Involved

If you receive an inquiry from the ACCC or a state/territory consumer agency, take it seriously and respond on time. Collate your records (approvals, evidence for claims, call scripts, training materials) - good documentation often makes a real difference.

It’s also prudent to get early legal guidance if you think a representation may have missed the mark. A measured, proactive approach can help resolve issues more efficiently and reduce business disruption.

Key Takeaways

• Misrepresentation under the ACL is broad - it covers any conduct that misleads or is likely to mislead, based on the overall impression (intention isn’t required).
• Specific prohibitions (such as those in section 29) ban false claims about price, quality, origin, sponsorship, performance and more.
• There are no general “defences” to section 18 - disclaimers and good intentions won’t rescue conduct that’s misleading in context.
• Good ACL hygiene includes accurate pricing, substantiated claims, clear conditions, updated web content and trained staff.
• Practical tools like a Website Terms and Conditions, tailored warranty wording, appropriate disclaimers and a transparent Privacy Policy help set accurate expectations.
• If something goes wrong, respond quickly and transparently, keep strong records and consider seeking advice early to manage risk.

If you would like a consultation on Australian Consumer Law misrepresentation compliance for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.