Misleading and deceptive conduct is a serious issue that includes a broad range of actions. As a business owner, you may be found liable if you engage in false advertising or deceptive pricing, as well as if you make misleading claims about the quality of your good or service. The Australian Consumer Law (ACL) regulates misleading and deceptive conduct, and there are serious consequences if you breach these laws. This article uses the Australian Competition and Consumer Commission (ACCC) v Qantas Airways Limited (Qantas) case to explore key characteristics of misleading and deceptive conduct.
Australian Competition and Consumer Commission v Qantas Airways Limited
In 2023, the ACCC, Australia’s national consumer law regulator, brought a claim in the Federal Court of Australia (FCA) against Qantas. The claim focused on the airline’s conduct in advertising and selling tickets for flights it had already cancelled. More specifically, the ACCC alleged that Qantas engaged in false, misleading, or deceptive conduct by advertising tickets for 8,000 flights that had previously been cancelled between May 2021 and August 2023. Qantas has admitted that it had engaged in misconduct for this time period and that it affected thousands of flights.
Qantas’ conduct was false and misleading because, when it advertised and sold the tickets, it knew the flights had been cancelled and were unavailable for sale. It advertised the flights with stated flight numbers and scheduled departure and arrival times.
Qantas has agreed to settle the matter by paying a $100 million fine to the Australian Government. The $100 million penalty, agreed by Qantas and the ACCC, will be approved by the FCA after the hearing. As part of the settlement, Qantas has provided an undertaking to pay a projected $20 million to more than 86,000 affected customers. Furthermore, the company has promised not to engage in this type of conduct in the future. Qantas has also agreed to pay part of the ACCC’s legal costs of the proceedings.
Consequences of Misleading or Deceptive Conduct
As a business owner, it is important to understand the significant penalties and potential damages for engaging in misleading and deceptive conduct.
1. Legal Ramifications
Engaging in misleading or deceptive conduct can lead to a time-consuming and expensive court proceeding. You may face fines or penalties and incur legal costs. If you run a small to medium business, this can be particularly financially straining. Legal proceedings can reduce the trust your clients, consumers, and stakeholders have in your business.
2. Reputational Damage
Misleading or deceptive conduct claims and legal proceedings can tarnish your business’ reputation, credibility and brand. Consequently, such negative publicity may lead to decreased sales and consumer loyalty. This is a highly relevant concern since publicity around unethical business practices can spread rapidly through social media. As shown with Qantas, restoring a damaged reputation can be lengthy, challenging and can require significant resources.
3. Customer Loss and Dissatisfaction
As a small to medium business owner, it is important to keep customers happy and avoid deceptive practices. Your customers may be quick to boycott, moving to a competitor who is perceived to be more transparent and trustworthy. Qantas’ actions negatively affected over 86,000 passengers, leaving them all dissatisfied with their service. Recovering these lost customers may be problematic. Qantas may have to take proactive efforts and measures to rebuild their trust and credibility.
The ACCC has emphasised the severity of Qantas’ conduct and aimed for a significant penalty to discourage similar behaviour. The ACCC aims to use this claim against Qantas and settlement as a deterrent. The claim shows businesses that the ACCC takes action to ensure Australian companies are operating clearly, accurately and honestly with their customers.
Continue reading this article below the formStrategies to Avoid Engaging in Misleading or Deceptive Conduct
To avoid the negative ramifications of misleading and deceptive conduct, it is crucial that your business develops a strong policy for reporting and monitoring it. This reflects vigilance and a commitment to continuous improvement. Below, we explain some key strategies that may help your business avoid engaging in any misleading or deceptive practices.
1. Policy Development
Having clear comprehensive policies and guidelines is essential. These documents should meticulously outline acceptable advertising, marketing, and sales practices while explicitly prohibiting deceptive behaviours. Qantas is a great example of the importance of adherence to these policies and the potential consequences of non-compliance. Accordingly, your business should emphasise honesty, transparency, and accuracy in all communications.
2. Monitoring and Reporting
You must establish effective mechanisms for monitoring and reporting instances of misconduct within your business. This involves creating channels through which employees can raise concerns or suspicions, ensuring confidentiality and protection from retaliation. Encouraging a culture of accountability and integrity promotes early detection and swift resolution of potential issues. As a result, you can safeguard your business’s reputation and foster trust among stakeholders.
3. Continuous Improvement
Embracing a commitment to continuous improvement is vital for long-term compliance. To ensure your business remains adaptable and resilient, you should regularly review and update policies in response to changes in:
- laws;
- regulations; or
- industry standards.
One way you may do this is by conducting periodic audits of marketing and advertising materials to identify areas for improvement and address any potential risks. Furthermore, soliciting feedback from customers and stakeholders further enhances transparency and accountability. Engaging with individuals your business impacts reinforces your dedication to ethical conduct and consumer protection.
ACCC Enforcement Priorities
The ACL provides the ACCC with a range of enforcement remedies to address any contraventions, which include court-based outcomes and court-enforceable undertakings. The ACCC encourages compliance to prevent breaches of the ACL by:
- promoting competition among businesses;
- promoting fair trading among businesses; and
- protecting consumers in their dealings with businesses.
The ACCC sets out principles in their enforcement policy to achieve compliance with the ACL. Some of the ACCC’s 2024-25 enforcement priorities include:
- misleading pricing and assertions regarding essential services, notably in energy and telecommunications;
- consumer and fair trading concerns within the digital economy, particularly concerning deceptive advertising in influencer marketing, online reviews, in-app purchases, and price comparison platforms;
- unfair contract clauses found in consumer and small business agreements; and
- enhancing industry adherence to consumer guarantees, focusing on consumer electronics and retailer misconduct concerning delivery timeframes.
In light of the Qantas case, the ACCC has enforcement priorities to promote compliance with the ACL. By emphasising fair trading and protecting consumers, the ACCC seeks to deter similar breaches and uphold integrity in business dealings.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Key Takeaways
The ACCC plays a pivotal role in enforcing the ACL to address misleading and deceptive conduct in business practices. Examples like Qantas indicate the severe financial and reputational consequences of deceptive conduct in misleading consumers. Applying the case’s outcome to your business, you should prioritise honesty and transparency to avoid similar legal ramifications and safeguard consumer trust and loyalty. As a business owner, it is crucial to understand the consequences of engaging in misleading or deceptive conduct and strategies to mitigate these risks.
If you have further questions about misleading and deceptive conduct, contact our experienced dispute resolution lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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