Identifying Unfair Business Practices in Australia: A Legal Guide

Running a business in Australia is full of opportunity - but it also means navigating rules that keep the market fair and transparent. Whether you’re building a startup or scaling an established company, understanding “unfair business practices” isn’t just about avoiding penalties. It’s about building trust, protecting your brand, and competing on a level playing field.

In this guide, we’ll explain what counts as unfair conduct under Australian law, how to spot common red flags in day‑to‑day operations, and the practical steps you can take to stay compliant. We’ll also clarify how enforcement works (and correct a few common misconceptions). If you want to run a business that’s both competitive and compliant, you’re in the right place.

What Counts As An Unfair Business Practice In Australia?

“Unfair business practices” (sometimes called “unfair trade practices”) covers conduct that misleads, pressures or takes advantage of customers, suppliers or competitors. It’s not about a disappointing product or slow service - it’s about behaviour that erodes trust or distorts fair competition.

The main rules live in the Australian Consumer Law (ACL), which sits in the Competition and Consumer Act 2010 (Cth). The ACL applies broadly to anyone engaged in trade or commerce, including B2B contexts in many situations.

Key categories to know include:

• Misleading or deceptive conduct: It’s unlawful to engage in conduct that is misleading, deceptive or likely to mislead or deceive. This principle is set out in section 18 of the ACL and touches almost everything from ads and website copy to sales conversations and pricing displays.
• False or misleading representations: Specific false claims (for example, about price, quality, origin, testimonials, or affiliation) are prohibited. Claims must be accurate, clear and capable of being substantiated.
• Unfair contract terms (UCT): Standard form contracts used with consumers and small businesses can’t include terms that create a significant imbalance, aren’t reasonably necessary to protect your legitimate interests, and would cause detriment if enforced. Since late 2023, courts can impose civil penalties for including or relying on unfair terms.
• Unconscionable conduct: Extremely harsh or oppressive behaviour - particularly where one party exploits a special disadvantage or applies undue pressure - is prohibited.
• Specific bans: The ACL also bans pyramid selling, bait advertising, referral selling, and harassment or coercion in connection with goods or services.

These rules apply across industries - from eCommerce and professional services to franchising and retail. If a practice is likely to mislead, unreasonably pressure, or unfairly disadvantage someone, it’s a red flag.

How Do You Spot Unfair Practices In Day-To-Day Business?

It helps to translate the law into practical scenarios you might see in your marketing, sales and supplier relationships. Watch for these common problem areas:

• Overstated claims and “too good to be true” promises: If your product or service claims can’t be backed by evidence (results, endorsements, savings, or origins), you risk breaching misleading conduct rules and specific false representation provisions.
• Confusing pricing or “drip pricing”: If the headline price excludes mandatory fees or charges, or key eligibility conditions are hidden in fine print, customers may be misled. Pricing representations must be clear, prominent and honest.
• Scarcity or discount tactics that don’t stack up: “Only 2 left!” or “Ends tonight” messages must be genuine. So must “Was $X / Now $Y” price comparisons.
• Unfair “take‑it‑or‑leave‑it” contract terms: Clauses allowing unilateral price changes, broad termination rights for you (but not the other party), or unilateral variation of key deliverables can be risky in standard form contracts with consumers or small businesses.
• Pressure sales and “fine print” surprises: Aggressive upselling; burying important limitations, fees or exclusions; or pushing vulnerable customers into quick decisions can tip into unconscionable conduct.
• Bait advertising and stock issues: Advertising a great deal with very limited stock (without clearly disclosing limits) can be bait advertising if you’re using it primarily to lure customers to higher‑priced alternatives.
• Pyramid-style schemes: If participant rewards mainly depend on recruitment rather than real product sales, that’s a high‑risk model under the ACL.

A helpful sense‑check is to ask: “Would a reasonable customer be misled, pressured or left worse off because of how we’re communicating or contracting?” If the answer is “possibly”, it’s time to rethink the practice.

What Laws Regulate Unfair Business Practices?

The ACL is the central framework. In practical terms, you’ll engage with these core obligations most often:

Misleading Or Deceptive Conduct

It’s unlawful to engage in conduct that is misleading or deceptive, or likely to mislead or deceive. This principle is broad and applies to all aspects of trade or commerce - not just formal ads, but also landing pages, social posts, packaging, sales scripts and verbal claims. Understanding your obligations under section 18 can help you build compliant processes across teams.

False or Misleading Representations

There are specific prohibitions around particular claims (for example, about price, testimonials, quality, or origin). Be especially careful with “Made in Australia” statements, energy savings, health benefits, and comparisons with competitors - you need evidence to back them up.

Unfair Contract Terms (UCT)

Standard form contracts with consumers and many small businesses can’t include terms that are unfair. Courts can now impose penalties for proposing, using or relying on unfair terms, so it’s wise to audit your templates and consider a targeted UCT review.

Unconscionable Conduct

Conduct that’s particularly harsh or oppressive can be unconscionable. Think taking advantage of language barriers, burying material limitations, or applying undue pressure to accept harmful terms. What’s “unconscionable” depends on the facts - so context matters.

Other Frameworks May Apply

• Franchising: If you franchise your business, the Franchising Code of Conduct imposes disclosure and good‑faith obligations and regulates key terms and processes.
• Privacy and data: If you are an “APP entity” under the Privacy Act 1988 (Cth) (for example, you turn over more than $3 million annually, or you handle certain types of sensitive information or operate in specified sectors), you must comply with the Australian Privacy Principles. Even if you’re not legally required, having a clear, accurate Privacy Policy is best practice and often required by platforms and enterprise customers.

How Is The Law Enforced (And What Can Happen If You Get It Wrong)?

The Australian Competition and Consumer Commission (ACCC) investigates potential ACL breaches and can accept court‑enforceable undertakings or issue infringement notices in some cases. For serious matters, the ACCC can commence proceedings in court.

It’s the courts - not the ACCC - that impose civil penalties, make compensation orders, grant injunctions and declarations, or disqualify directors. Private parties (for example, consumers or competitors) can also take action seeking compensation and other remedies if they’ve suffered loss from a contravention.

Penalties for breaches can be significant, particularly for large businesses. Beyond financial consequences, the reputational damage from allegations of unfair practices can be long‑lasting. Taking a proactive approach is almost always the cheaper path.

Practical Steps To Prevent Unfair Practices In Your Business

Good compliance is about habits and systems - not just one‑off fixes. Here’s a practical roadmap.

1) Build “Truth In Marketing” Into Your Processes

• Require evidence before making performance, savings, health or environmental claims.
• Make key qualifications, limitations and eligibility criteria prominent, not hidden in fine print.
• Sense‑check “urgency” and “scarcity” tactics to ensure they’re accurate.
• Keep a central register of claims and substantiation so your team knows what’s approved.

2) Tighten Your Pricing And Promotions

• Display total prices clearly where feasible, including mandatory fees.
• Use “from” pricing carefully - ensure most customers can realistically purchase at the headline price.
• Ensure discount comparisons are genuine and current (e.g. real “was/now” pricing).

3) Review Your Standard Contracts

Audit your templates used with consumers and small businesses for UCT risk. Watch for unilateral variation rights, broad indemnities, excessive termination rights, automatic renewals without fair notice, and limits on liability that go beyond what’s reasonably necessary. Where needed, update your templates and document your rationale.

If you rely on templated terms or legacy forms, consider a targeted UCT review to reduce risk and align with current law.

4) Train Your Team (Sales, Marketing, Customer Support)

Make ACL basics part of onboarding and refresher training. Give staff practical examples of what they can and can’t say, and empower them to escalate tricky questions early. Consistency across teams is key.

5) Put The Right Legal Documents In Place

Clear, tailored documents set expectations and reduce disputes. For many businesses, that includes a customer‑facing agreement, website terms and a privacy statement (especially if you collect personal information online).

• Customer Contract: outlines scope, deliverables, payment, timeframes, warranties and liability so customers know exactly what they’re getting.
• Website Terms & Conditions: set the ground rules for using your site or platform, including acceptable use, IP ownership and limitations of liability.
• Privacy Policy: explains how you collect, use and store personal information. Legally required for many businesses and a strong trust signal for all.
• Non‑Disclosure Agreement: protects confidential information in supplier discussions, partnerships or pre‑launch conversations.
• Employment Contract: sets clear expectations with staff, supports fair processes and helps avoid disputes.
• Shareholders Agreement: if you have co‑founders or investors, align on decision‑making, exits and ownership to prevent internal conflicts that can spill into customer harm.

Well‑drafted documents won’t fix misleading conduct, but they do reduce ambiguity, improve customer experience and create a compliant baseline for your operations.

6) Establish A Clear Complaints Pathway

Encourage customers to raise issues early and make it simple to resolve concerns. A transparent process helps you fix problems before they escalate and also provides valuable feedback on gaps in your sales, marketing or delivery.

7) Document Decisions And Keep Evidence

Keep records of claim substantiation, pricing decisions, stock levels for promotions, and how you’ve assessed contract terms. Good records make it easier to demonstrate compliance if challenged.

8) Get Tailored Advice For Edge Cases

If a campaign, product claim or contract term sits in a grey area, it’s worth getting a quick sense‑check from a legal expert. Small adjustments early can save time and cost later.

Real‑World Examples: Where Businesses Commonly Trip Up

Seeing the rules in action helps you benchmark your own processes. These scenarios regularly cause trouble:

• “Green” or sustainability claims without data: “Eco‑friendly”, “plastic‑neutral” or “carbon positive” statements need clear, verifiable substantiation and shouldn’t overstate the facts.
• Health and performance claims: Supplements, fitness programs, skincare, and devices often make ambitious claims. You must be able to support them with adequate evidence.
• Free trials and subscriptions: Auto‑renewal, cancellation and refund terms must be presented clearly and fairly, not buried at checkout.
• “Compare and save” advertising: Comparisons must be accurate and up‑to‑date. Be careful with competitor references and ensure any featured prices are current and comparable.
• Unfair refund or cancellation barriers: Policies that restrict statutory consumer rights or make refunds practically impossible can mislead customers and breach the ACL.
• Supplier agreements that flow down risk unfairly: If you pass all liability to smaller suppliers in a standard form, those terms may be vulnerable to UCT action.

If any of these sound familiar, prioritise a review and update your policies, copy and templates accordingly.

What Should You Do If You Suspect Unfair Practices (Yours Or Someone Else’s)?

If you identify a risk in your own operations, act quickly and transparently:

• Correct or clarify marketing claims, price displays or website content immediately.
• Update unfair or ambiguous clauses in your standard form contracts and notify new and existing customers where appropriate.
• Improve your complaints pathway, and resolve affected customer issues promptly and fairly.
• Document the changes and train your team so issues don’t reappear.

If you believe a competitor is engaging in unlawful conduct, consider gathering evidence, seeking legal advice, and assessing options. In some cases, raising concerns directly is appropriate; in others, a formal complaint to the ACCC or court action may be warranted. The right path depends on the conduct and your commercial objectives.

Key Takeaways

• Unfair business practices under the ACL include misleading conduct, false representations, unfair contract terms, unconscionable conduct and specific bans (like bait advertising and pyramid selling).
• The ACCC investigates and takes action, but penalties and compensation orders come from the courts; private parties can also seek remedies if they suffer loss.
• Build compliance into everyday operations: truthful marketing, clear pricing, fair contracts, good training, and an easy complaints pathway.
• Review standard form contracts used with consumers and small businesses for UCT risk, and consider a focused UCT review where needed.
• Put the right foundation in place with a clear Customer Contract, Website Terms & Conditions, and - where required or expected - a transparent Privacy Policy.
• When in doubt about a claim, promotion or contract term, get tailored advice early - small tweaks now can prevent bigger problems later.

If you would like a consultation on identifying and preventing unfair business practices in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.