Misleading Advertising Laws: What Australian Businesses Need to Know

Marketing is one of the fastest ways for a startup or small business to grow - but it’s also one of the fastest ways to accidentally create legal risk.

Most businesses don’t set out to mislead anyone. The problem is that misleading advertising can happen through small oversights: a rushed social media caption, an unclear “sale” banner, a bold claim you can’t quite back up, or a discount that isn’t actually available to most customers.

In Australia, advertising rules are heavily influenced by the Australian Consumer Law (ACL) in Schedule 2 of the Competition and Consumer Act 2010 (Cth). If your ads cross the line into misleading or deceptive conduct (ACL s 18), or false or misleading representations (ACL s 29), you can face customer complaints, ACCC attention, refund demands, reputation damage, and disputes that distract you from building the business.

This guide walks you through what misleading advertisements are, where small businesses commonly slip up, and the practical steps you can take to advertise confidently (and competitively) without falling into common traps.

What Counts As Misleading Advertisements In Australia?

In plain English, misleading advertisements are ads that are likely to lead customers to the wrong understanding about what you’re offering.

Under the ACL, the key concept is “misleading or deceptive conduct” (ACL s 18) - and it doesn’t require intent. That’s important. You can breach the law even if:

• you genuinely believed your claim was correct,
• the ad was written by a contractor or agency, or
• only some customers were misled.

Generally, risk arises where an advertisement creates a false impression about things like price, quality, performance, availability, terms of supply, refunds, or what the customer is actually getting.

Misleading vs “Puffery”: Where’s The Line?

Marketing often includes enthusiasm and hype. Some general statements may be treated as “puffery” (for example, “best coffee in town”), because customers are unlikely to treat them as a literal, verifiable fact.

The line is more likely to be crossed when you make specific or measurable claims, or when you imply something factual that customers would reasonably rely on - like “100% Australian made”, “next-day delivery guaranteed”, “approved by regulators”, “only 3 left”, or “$0 cancellation fees”.

It’s Not Just What You Say - It’s What You Leave Out

Misleading advertisements can also happen through omission. If a customer would have made a different decision had they known an important detail, not disclosing it can be risky.

This is especially relevant in digital marketing where key information is hidden in tiny text, behind multiple clicks, or only disclosed after checkout.

Common Types Of Misleading Advertisements (With Practical Examples)

If you’re a small business moving quickly, it helps to know the usual “danger zones” before you hit publish.

1. Misleading Pricing And “Was/Now” Discounts

Pricing issues are one of the most common triggers for complaints because customers notice them immediately.

Risky advertising patterns include:

• Advertising a discount off a “was” price that wasn’t genuinely the usual price.
• Advertising a low headline price, then adding unavoidable fees later (booking fees, admin fees, “platform fees”, etc.).
• Using “from $X” pricing when very few customers can actually access that price.

If you do promotions, it’s worth checking your advertised price approach and whether it matches expectations around advertised price transparency.

2. False “Limited Time” Or Scarcity Claims

Scarcity can be a legitimate sales tactic - but only if it’s true.

Common examples that can become misleading advertisements include:

• “Ends tonight!” countdown timers that reset every day.
• “Only 2 left” messaging that isn’t connected to real inventory.
• “Pre-order closes in 1 hour” when it never closes.

If the scarcity is manufactured, customers may argue they were pressured into buying on a false basis.

3. Overstated Product Or Service Claims

Startups often want to stand out with big promises. The challenge is making sure you can substantiate those promises.

Examples of claims that commonly cause trouble:

• Health, wellness, or performance claims without evidence (e.g. “clinically proven” when it’s not).
• “Waterproof”, “unbreakable”, “guaranteed results”, “permanent”, or “works for everyone”.
• Environmental claims like “eco-friendly” or “carbon neutral” without a clear basis.

A good rule of thumb is: if a claim could influence a customer’s decision, treat it like a factual statement and be prepared to prove it.

4. Misleading Warranty And Refund Messaging

Warranty language is another common source of misleading advertisements - particularly for ecommerce brands and product-based businesses.

Be careful with statements like:

• “No refunds” (which can be misleading if customers have ACL rights).
• “All sales final” (same issue).
• “2-year warranty guaranteed” when it implies customers have no rights beyond that.

If you sell goods, you should make sure your messaging aligns with consumer guarantees under the ACL (including the rules in ACL ss 54–59 and related remedies provisions). Warranty misunderstandings are particularly common where businesses assume there’s a fixed duration - but in reality, consumers may have rights for a period that’s reasonable for the type of product. This often comes up in the context of warranty discussions.

5. Hidden Conditions In Ads (Fine Print That Doesn’t Fix The Headline)

Many businesses try to “fix” a bold headline with fine print. But legally, disclaimers won’t necessarily protect you - especially if the overall impression of the ad is still misleading, or if the qualification isn’t clear and prominent.

Fine print is particularly risky if it is:

• hard to find,
• unclear or overly technical,
• contradictory to the main message, or
• shown only after the customer has already committed (like after checkout).

Why Misleading Advertisements Are A Big Risk For Startups (Even If You’re Small)

It can be tempting to assume these rules mainly apply to large companies. In practice, startups and small businesses are often more exposed because a single issue can have a bigger impact.

Small Teams, Fast Decisions, Bigger Exposure

Startups move fast - and marketing is usually handled by a small team (or one person) juggling multiple priorities. That’s where mistakes happen: a claim gets copied from a supplier, a feature is still in beta, a “sale” continues longer than planned, or a landing page doesn’t match the ad.

Online Ads Scale Quickly

If you advertise online, your reach can jump overnight. That’s great for sales, but it also means a misleading statement can be seen by thousands of customers in a short time.

Reputation Damage Is Often The Real Cost

Even if a complaint doesn’t escalate to regulators, disputes and negative reviews can be a major distraction. A single “this ad is misleading” post can spread quickly, especially in niche communities.

Clear, accurate advertising isn’t just about legal compliance - it’s also about protecting trust in your brand from day one.

A Practical Compliance Checklist For Ads, Websites And Social Media

When you’re creating marketing content, it helps to build a repeatable review process. Here’s a practical checklist you can use before launching ads, updating a product page, or sending an email campaign.

1. Check The “Overall Impression”

Don’t just review the literal words. Ask: what would a reasonable customer take away from this ad?

• What do they think they’re buying?
• What do they think it costs (including fees)?
• What do they think the key conditions are?

If your fine print changes the meaning of the headline, the headline is probably the problem.

2. Substantiate Your Claims Before You Publish

Before making a measurable claim (performance, speed, durability, results, comparisons), make sure you can support it.

• Do you have test results, supplier documentation, or evidence?
• Is it true for all customers, or only under certain conditions?
• Is the claim still true after product updates or shipping changes?

If the claim is only true sometimes, rewrite it so it’s accurate (for example, “typically ships within 2–3 business days” rather than “ships next day”).

3. Make Key Terms Easy To Find

If there are important conditions (like eligibility for a discount, cancellation rules, exclusions, limitations, or minimum spends), they should be prominent and easy to understand.

For online businesses, your Website Terms and Conditions are often where you set out how your sales process works, but your ads and landing pages should still communicate the main terms clearly (not bury them).

4. Be Careful With Testimonials And Reviews

Testimonials can be powerful, but they can also mislead if they create unrealistic expectations.

Consider:

• Are they genuine and representative?
• Do they imply results that most customers won’t achieve?
• Are you selectively showing only extreme outcomes?

If you use influencer content, make sure claims about performance or outcomes are consistent with what you can actually deliver.

5. Match Your Ads To Your Actual Supply And Processes

Misleading advertisements often arise when marketing gets ahead of operations.

• If you advertise “same-day shipping”, do you have the systems to meet that promise?
• If you advertise “in stock”, is inventory tracking accurate?
• If you advertise “24/7 support”, do customers really get support at that level?

It’s safer to underpromise and overdeliver - especially while your business is scaling.

How To Reduce Legal Risk With The Right Contracts And Policies

Good advertising compliance isn’t only about marketing copy. It’s also about having the right legal foundations so your promotions, sales process, and customer communications stay consistent across channels.

Here are some documents that commonly help startups and small businesses manage risk around misleading advertisements.

• Customer Terms and Conditions: sets clear rules for purchases, cancellations, delivery timeframes, and limitations. This is especially important if you sell online, offer subscriptions, or provide services with variable scope.
• Returns and Refunds Policy: explains your process clearly, while still respecting consumer guarantee obligations under the ACL.
• Privacy Policy: if your ads collect leads (email sign-ups, lead magnets, competitions), you’ll likely be collecting personal information - and your Privacy Policy should match how you actually handle it.
• Competition Terms and Conditions: if you run giveaways, referral promotions, or “win” campaigns, set clear entry rules, eligibility, and how winners are chosen.
• Supplier/Distribution Agreements: if you rely on supplier claims (like product origin or performance specs), your agreements should help allocate responsibility and ensure you’re not left carrying the legal risk alone.

If you run an ecommerce business, your website is effectively your “storefront” and your “sales contract” at the same time. Having tailored terms can help ensure what your customers see in ads aligns with what your business can actually deliver.

What To Do If You Think Your Business Has Published Misleading Advertisements

If you’re reading this and thinking, “We may have already posted something questionable,” the most important thing is not to panic - but also not to ignore it.

How you respond can make a big difference to customer trust and legal exposure.

Step 1: Pause The Campaign And Preserve Evidence

If an ad is potentially misleading, pause it while you review. Take screenshots of:

• the ad creatives and captions,
• landing pages,
• pricing pages, and
• email campaigns.

This helps you work out what impression was created and what customers actually saw.

Step 2: Identify The “Gap” Between The Ad And Reality

Ask:

• What did the ad imply?
• What was actually delivered?
• Is the issue a one-off mistake or a systemic problem (like a pricing set-up across the website)?

Sometimes the fix is copy changes. Other times, the ad is accurate but your operational process needs to change (for example, shipping times or stock availability).

Step 3: Fix The Messaging (And Make Sure The Fix Is Everywhere)

Inconsistent information across channels is a common problem. You might update your website, but forget to update:

• Google ads headlines,
• old social posts that are still pinned,
• automated email sequences, or
• marketplace listings.

Do a sweep so customers aren’t getting different “versions” of your offer.

Step 4: Consider Customer Remediation

If customers have already purchased based on a misleading impression, consider how you will address it. Depending on the issue, this might mean:

• providing refunds,
• offering a replacement,
• allowing cancellations without penalty, or
• honouring the advertised offer (if feasible).

This is both a legal and customer-trust issue, and the right response depends heavily on the facts.

Step 5: Put A Review Process In Place Going Forward

Once you’ve fixed the immediate problem, build a lightweight internal process so it doesn’t happen again. For example:

• a “substantiation” folder where you keep evidence supporting major claims,
• a checklist for promotions (start/end dates, stock levels, eligibility rules), and
• a final review step before launch for your highest-risk claims (pricing, health, performance, warranties).

As your team grows, you can also add marketing guidelines inside your broader workplace policies and onboarding.

Key Takeaways

• Misleading advertisements can breach the Australian Consumer Law even if you didn’t intend to mislead anyone - it’s often about the overall impression your marketing creates (including under ACL s 18).
• Common risk areas include pricing and discounts, scarcity claims, performance claims, warranty/refund messaging, and key terms buried in fine print.
• Startups and small businesses are especially exposed because online ads scale quickly and reputation damage can be immediate.
• A practical compliance process includes checking overall impression, substantiating claims, making key terms prominent, and ensuring your ads match real operations.
• Strong website terms, clear refund processes, and an up-to-date Privacy Policy help keep customer communications consistent and reduce dispute risk.
• If you suspect you’ve published misleading advertisements, pause the campaign, fix the messaging everywhere, and consider remediation steps based on what customers were led to believe.

This article is general information only and not legal advice. If you’d like advice on your specific circumstances, contact a lawyer.

If you’d like help reviewing your advertising, website terms or customer-facing promotions to reduce the risk of misleading advertisements, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.