In Short
- Advertising must comply with the Australian Consumer Law to avoid misleading claims.
- Ensure promotional material is clear, accurate, and substantiated.
- Review advertising regularly to maintain compliance and mitigate legal risks.
Tips for Businesses
Regularly review your advertising for accuracy and clarity. Always substantiate claims to avoid misleading consumers and potential legal issues. If unsure, seek legal advice to ensure compliance with the Australian Consumer Law and protect your business from fines or penalties.
Most Australian businesses use advertising to promote their goods and services. Whether you advertise through television, radio, the internet or print media, you must follow the law. One relevant law is the Australian Consumer Law (ACL). The ACL in the Competition and Consumer Act 2010 (Cth) is a national law that aims to protect consumers and ensure fair trading. This article unpacks key things your business should know about retail marketing and advertising compliance.
Misleading or Deceptive Conduct
The ACL states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Misleading and deceptive conduct can result from acts or omissions.
As a retailer, ensure your advertisements for products or services are truthful. Likewise, consider inserting a prominent disclaimer that you have made reasonable steps to verify all information but that some uncertainty may exist.
1. Pricing of Goods and Services
Always be transparent when pricing your goods and services. For example, if you sell products, you should state the total price, including any tax, duty, fee, levy or other additional charges. Note, however, that the ACL provides a conditional exemption from these pricing requirements to cafés and restaurants.
The Unit Pricing Code is mandatory for certain food-based grocery retailers. Unit pricing means that these retailers must display the price of a grocery item in a standard unit of measurement—for example, $1 per 100 grams—alongside its price.
2. Environmental Claims
If your business makes environmental claims, you must be able to substantiate them and have proof they are accurate. For example, if you promote your product as being “eco-friendly” or “sustainable,” there must be a reasonable basis for your claims. To avoid misleading consumers, you should identify the core elements that make a product “green” or “safe for the environment” rather than making ambiguous statements. The types of evidence you can produce might include scientific articles and testing in a lab.
3. Country of Origin Claims
Retail businesses should accurately represent the origin of their products so that consumers have accurate and reliable information. If you supply food products, you are required to comply with the Country of Origin Food Labelling Information Standard. For example, if you claim that your product is “100% Australian,” there should be clear evidence that it is from Australia.
4. Health Claims
Any health-related claims require scientific evidence. For instance, if your business markets dietary supplements purporting to eliminate a person’s allergic reactions, there should be evidence supporting this claimed outcome. Also, be careful of other laws that might apply to products with health claims. In particular, the Therapeutic Goods Act may be relevant to your business.
5. Animal Welfare Claims
If you claim your products are “cruelty-free” or “animal-friendly,” your business must have evidence supporting this. For example, many farms advertise their eggs as “free range”—meaning that chickens are in an open outdoor environment—and charge a higher price.
What About Promotional Techniques?
Further, be aware of the risks associated with promotional techniques, such as bait advertising and offering rebates. While these are legitimate techniques if you conduct them according to the ACL, adequate oversight (considering the size and resources available to your organisation) is necessary.
1. Bait Advertising
Bait advertising is when a business offers a discounted price, but the good or service is unavailable. For example, if you were to advertise goods but then when customers arrive, the goods are unavailable, this might be unlawful. You must clearly explain if an advertised good or service is in short supply or on sale for a limited time. There may be a breach unless you promptly offer an acceptable substitute or take other steps to rectify the situation.
2. Rebates, Gifts or Prizes
When promoting goods or services, be cautious about offering rebates, gifts, prizes or other free items. If you use this promotional method, pay attention to the terms of the offer and adhere to these terms. In particular, you should provide a rebate or gift within the advertised time or a reasonable period.
3. Comparative Advertising
You can use comparative advertising to promote your business’ superiority directly. Comparative advertising involves directly challenging your competitors and claiming that your good or service is better. However, it is essential to consider whether the comparison is accurate for the length of the promotion. Check that the products and services compared are similar.
4. Reviews and Testimonials
Consumers often check reviews and testimonials about businesses before deciding to purchase. You should take reasonable steps to ensure that all reviews and testimonials on your website reflect genuine views and people. For example, suppose you notice a fake positive review about your business on your social media. In that case, the Australian Competition and Consumer Commission (ACCC) might hold you responsible for the content of that review if it is misleading or deceptive.
Continue reading this article below the formWhat Remedies Are Available?
If you fail to comply with the ACL, your customers may be eligible for a refund, compensation or cancellation of the contract. The exact remedy available will depend on whether the failure to comply was minor or significant. In addition, the ACCC may impose fines.
This guide provides key information on how to manage a business dispute as quickly and cost-effectively as possible.
Key Takeaways
When running a retail marketing campaign, you should act honestly and reasonably. Importantly, there are key laws to follow to ensure marketing and advertising compliance. All relevant information about a product should be accurate, such as:
- the origin of the product;
- whether the product is environmentally friendly; and
- any benefits to the consumer if they buy the product.
A breach of Australian Consumer Law may entitle your customers to a refund, replacement, or compensation. The ACCC may also impose a fine.
To learn more about marketing and advertising compliance for your business, our experienced advertising compliance lawyers can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 1300 544 755 or visit our membership page.
Frequently Asked Questions
Advertising compliance involves ensuring that all marketing and promotional content adheres to the Australian Consumer Law, avoiding misleading or deceptive claims.
Businesses must ensure that all claims are accurate, clear, and supported by evidence. Promotional materials should not be misleading or deceptive.
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