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There are certain rules that you must follow when you communicate with prospective customers about your goods or services. To comply with the Australian Consumer Law (ACL), it is important that you do not make any false statements about the qualities, characteristics or values of goods and services. This is an important consideration across your:

  • advertisements; 
  • sales calls; or 
  • other means of communication. 

Failing to ensure the truthfulness and accuracy of your communication with customers may violate the ACL and: 

  • open you up to financial penalties; or
  • require you to pay compensation.

This article explains how you can communicate with your customers without infringing the ACL.

When Are You Being Misleading or Deceptive?

Your conduct may be misleading or deceptive if:

  • you engage in communication with your customers, such as publishing advertisements;
  • the conduct occurs for the purpose of trade or commerce; and
  • it misleads or deceives consumers, or induces a consumer into error.

Whether or not your conduct is misleading or deceptive is assessed as a whole, within the context of the surrounding facts and circumstances.

For example, you may have inadvertently given your customer the wrong pricing when speaking to them but corrected yourself immediately or shortly thereafter. The whole conversation would be assessed when determining whether your conduct was misleading.

Significantly, omissions or silence in relation to relevant information can also amount to misleading or deceptive conduct.

It is important to note that your intention is irrelevant when determining whether you have engaged in misleading or deceptive conduct. This means that you could still be liable for a breach of the ACL even when you may make a statement which you honestly believe to be true.

Common Mistakes

Businesses can often make misleading or deceptive statements to customers when communicating with consumers. Some of the most common areas are:

  • disclaimers;
  • unsubstantiated performance claims;
  • using the word ‘free’; and
  • misleading consumers about their rights.

Disclaimers

Many businesses rely too heavily on the use of disclaimers to cure any misleading statements. Importantly, your communications may still be misleading or deceptive, even if you include a disclaimer. This means that you cannot rely on a disclaimer to comply with the ACL.

A disclaimer will not be effective if the:

  • overall message or impression is misleading; and 
  • disclaimer contradicts the overall message of your conduct. 

For example, if an advertisement states “50% discount on all goods in store” but the disclaimer reads “discount applies only to t-shirts”, the disclaimer is unlikely to be effective.

A disclaimer must also be clear and prominent. This means that it cannot be in tiny print, as a consumer is unlikely to see or read this message.

Finally, you must consider the format of the advertisement. 

For instance, a small disclaimer is unlikely to resolve a misleading message on a billboard because a consumer driving past is unlikely to see the disclaimer.

Unsubstantiated Performance Claims

A performance claim is a statement that you make about the superior quality or performance of your products or services.

For example, a performance claim might look like this:

  • “Australia’s favourite milk”; or 
  • “Most effective skincare range for aging skin”.

You must make sure that you: 

  • have a reasonable basis to make the claim; and 
  • can substantiate it with evidence.

Using the Word ‘Free’

You should use the word ‘free’ cautiously when communicating to consumers. You must ensure that no significant conditions apply where you suggest that something might be available for ‘free’.

For example, a café may put up a sign that says “Free coffee!” However, if customers can actually only get a free coffee when they purchase a muffin, it may be considered misleading or deceptive conduct.

In general, the use of disclaimers is not sufficient to avoid the risk of being misleading.

Misleading Consumers about their Rights

When a consumer buys goods or services, those products automatically come with consumer guarantees under the ACL. Notably, there is an expectation that the goods or services are of acceptable quality.

Consumer guarantees: 

  • apply regardless of any other warranty offered; and 
  • may continue to apply after express warranties expire.

Some businesses offer extra warranties in relation to their goods or services. However, these additional promises do not replace the consumer guarantees. 

For example, it is not entirely truthful when a business displays a sign in their store that says “No refunds under any circumstances”. Therefore, it is capable of misleading consumers about their rights. However, the business could state that there are “No refunds for change of mind”.

Key Takeaways

It is important to be conscious of how you communicate with your prospective customers, to ensure that you avoid any misleading or deceptive conduct. You should take steps to ensure that any claim you make: 

  • is accurate; and 
  • can be supported by evidence. 

Further, you should also implement a monitoring policy, whereby you regularly review your: 

  • website; 
  • sales materials; and 
  • any terms and conditions.

This will help you ensure that: 

  • all statements are up to date and remain accurate; and
  • you comply with the ACL. 

If you would like advice about how to comply with the ACL, contact LegalVision’s advertising compliance lawyers on 1300 544 755 or fill out the form on this page.

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