OCBA - Misleading or deceptive conduct

What is misleading or deceptive conduct?

‘Conduct' includes actions and statements, such as:

advertisements
promotions
quotations
statements
any representation made by a person.

Business conduct is likely to break the law if it creates a misleading overall impression among the intended audience about the price, value or quality of consumer goods or services.

It is the actions and statements of the business that matter – not its intentions. A business can mislead and deceive, without intending to.

For example:

A trader's business name suggests an affiliation with a long-established institution. The name may mislead or deceive because of this similarity. The trader's intentions when choosing the name did not matter.

Puffery

‘Puffery' is wildly exaggerated, fanciful or vague claims that no reasonable person could possibly treat seriously or find misleading.

For example:

A cafe owner claims to make ‘the best coffee in the world'.
A business claims ‘all your dreams will come true' if you use a certain product.

Silence

A business can break the law by failing to give you relevant information.

Silence can be misleading or deceptive when:

one person fails to alert another to facts known only to them, and the facts are relevant to the decision
important details a person should know are not conveyed to them
a change in circumstance meant information already provided was incorrect.

Whether silence is misleading or deceptive will depend on the circumstances of each case.

For example, the following could be misleading:

A consumer who lives in a regional area is buying a mobile phone. The salesman knows where the consumer lives but fails to tell him that the coverage is poor in that area and the phone may be of no use.
A restaurateur is selling her restaurant. When asked the reason for sale, she does not mention that she is selling because a similar restaurant is opening nearby.

Disclaimers and small print

A business cannot rely on disclaimers buried in small print as an excuse for misleading or deceptive conduct.

For example:

A court found that a large department store engaged in misleading conduct when it advertised ‘25 per cent off all clothing' and ‘15-40 per cent off housewares', but in small print excluded certain clothing and manchester.

However, you cannot ignore disclaimers that are prominently displayed.

Prominent disclaimers may be enough to protect a business, depending on the circumstances.

For example:

A bank advertises low credit card interest rates for the first 12 months. The advertisement clearly indicates the low rates are only available to new customers who apply within a certain period. This disclaimer is sufficient because it clearly informs consumers about the terms and conditions.

Predictions and opinions

A statement about the future that does not turn out to be true is not necessarily misleading or deceptive.

But promises, opinions and predictions can be misleading or deceptive if the person making the statement:

For example:

A real estate agency was selling apartments with a view of the sea. The agency assured prospective buyers that the view was protected because the land between the apartment block and the sea was zoned for low-rise development. This was based on information provided by a council officer.
However, the council officer was wrong. The zoning was about to change, allowing high-rise development. The agency had made a false statement about a future matter but had reasonable grounds, so was not liable for misleading consumers.

A court will consider the circumstances and impact on the consumer when deciding if a prediction or opinion was misleading or deceptive.

Exceptions for information providers

‘Information providers' include media organisations such as:

radio stations
television stations
publishers of newspapers or magazines (including online).

Information providers will be liable for publishing an advertisement that is misleading or deceptive.

However, they may not be responsible if:

they are in the business of publishing or arranging for the publication of advertisements
they received the advertisement in the ordinary course of this business; and
they did not know, and had no reason to suspect, that the advertisement was misleading or deceptive.

For example:

A tradesman publishes an advertisement in a major newspaper. The advertisement states that he is a registered builder, when he is not. The newspaper staff was unaware of the builder's unregistered status. Although the advertisement may be misleading or deceptive, the newspaper will not be liable because it had no reason to suspect the information was false. However, the tradesman's conduct would be misleading or deceptive.

Penalties

Misleading and deceptive conduct may lead to civil action including injunctions and damages. Penalties may apply if the conduct breaches the Australian Consumer Law in other ways.

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