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It’s common business practice to engage in various forms of advertising. After all, you want to make sales, and to do so, you need to appeal to your market.
However, under Australian law, there are limits to how you advertise your goods or services. While it is completely legal to promote or advertise products to make sales, the law draws the line where it becomes unethical or unfair to the consumer.
You may have heard of misleading or deceptive conduct, which prohibits the act of misleading consumers about your products. Bait advertising is another concept discussed by the Australian Competition and Consumer Commission (ACCC).
So, what is bait advertising? And is it prohibited under the law?
Is Bait Advertising Illegal?
Firstly, it’s important to establish what bait advertising is.
It’s completely legal to advertise a product and state that it is on sale or for a special price. However, bait advertising occurs where a business offers a sale, but that product is not available in reasonable quantities.
It is also considered bait advertising where the sale is only available for a limited period of time, and you do not disclose this to consumers.
Bait advertising is illegal as it is unethical and unfair to the consumer. In a way, they are being misled into purchasing a product as they fall under the impression that the sale is not limited or that there is reasonable supply.
As a business, you need to be careful to avoid bait advertising as it is illegal under section 35 of the Australian Consumer Law (ACL).
What Is Bait And Switch Advertising?
Now that we’ve established bait advertising, let’s go through the details of bait and switch advertising.
As the name suggests, bait and switch advertising occurs where a business offers a product for sale. However, in reality, this sale isn’t available, so they offer something else for a higher price.
In line with consumer protection laws, bait and switch advertising is highly unethical and is therefore prohibited under the ACL.
Even if your business does this unintentionally, you could be held liable and face heavy penalties for breaching the ACL. To avoid this situation entirely, it’s advisable to consult a lawyer on your consumer law obligations to ensure your current business practices do not breach the relevant advertising laws.
Bait Advertising Under The Australian Consumer Law
The ACCC is the regulatory body for consumer protection laws in Australia, and they are responsible for enforcing the ACL. As such, they’ve written more details about bait advertising and how it fits into the misleading and deceptive conduct legal framework.
Like we mentioned, bait advertising is illegal. The ACCC goes further and sets out the maximum penalties that will be given for engaging in bait advertising and other forms of deceptive advertising.
For example, individuals can be fined up to $220,000. This goes up to $1.1 million if you’re a body corporate.
What Else Should I Know About Advertising Laws?
Bait advertising is only one of the unethical practices that are strictly prohibited by the ACL. We briefly mentioned misleading and deceptive advertising – it’s important to note that this requirement can be quite strict.
For example, even if your business does not actually deceive consumers, even the likelihood of deceiving someone can be sufficient to breach the ACL under section 18.
So, you want to make sure that you have a lawyer review your business practices and contracts in case you’re at risk of liability.
Should I Have Customer Contracts?
Customer contracts are the agreements between a buyer and seller (a business and its consumers).
The reason these have become so important in the business world is because consumers are often placed in an unfair bargaining position when it comes to the purchase of goods.
Businesses have a lot more power in encouraging consumers to purchase goods as they retain a larger degree of control over what they can and cannot disclose.
As such, it becomes necessary for certain laws to regulate this advertising behaviour.
While the ACL covers most grounds, it’s also important to have customer contracts to set out the roles and responsibilities of both parties involved in buying and selling. This way, both parties understand the arrangement and the laws that apply to their conduct.
As such, consumers can be given a rundown of their rights which they can enforce if something were to go wrong or against their favour in a transaction.
What Are Unfair Contract Terms?
Customer contracts are only one type of contract that a business will need. For example, you may also have Employment Contracts, Supply Agreements and Terms and Conditions.
In all of these contracts, it’s important to avoid any terms that would be unfair to the other party. For example, if you had an Employment Contract and you had a clause that did not allow the employee to discuss or negotiate salary adjustments with you as their employer, this could be considered unfair.
So, what is considered unfair?
A contractual term may be considered unfair if it causes an imbalance in the rights of parties, or causes detriment to the person relying on that term.
Unfair contract terms are a regime that is closely regulated by the ACCC. We’ve written more about it here.
Key Takeaways
Bait advertising is only one of the things that businesses should try to avoid as much as possible. Not only is it illegal and enforceable under the ACL, but it is also highly unethical and a bad look for your business overall.
To summarise the key points of this article:
- Bait advertising is where a business misleads consumers about the sale of a product where there is actually limited supply or limited time
- Bait and switch is also illegal, as it induces the consumer to make a more expensive purchase than as advertised
- The ACCC regulates and enforces the ACL, so if businesses are found to engage in bait advertising, there are heavy penalties
- Businesses should have customer contracts in place, but like their other contracts, the terms within the agreement should not be deemed unfair under the unfair contract terms regime
If you need help navigating your consumer law obligations, or your contracts need to be reviewed to ensure you’re not in breach of any relevant laws, it’s wise to reach out to a Sprintlaw consumer lawyer who has the experience and expertise to remove this stress.
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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