One of the commonly litigated pieces of legislation in Australia is the “misleading or deceptive conduct” section of the Australian Consumer Law in the Australian Competition and Consumer Act (formerly the Trade Practices Act). Under this Act a person in business is prohibited from engaging in conduct which is misleading or deceptive.  This covers conduct including:

  • Your advertisements.
  • Any promotions you publish.
  • Anything you say or promise to someone in the course of trade or commerce.

So if you mislead someone about your price, value or what good/services you are offering you may have breached the Act.

Penalties

Businesses face a number of steep penalties under the Act if they are found to have misled or deceived someone in the course of their business. Misleading and deceptive conduct can lead to civil actions including:

  • Having to pay compensation orders.
  • Awards in damages against you (which means you have to pay more than just compensation for the other side’s loss).
  • Being disqualified from operating a business.

So follow these tips to help you avoid misleading and deceptive conduct claims.

Disclaimers don’t necessarily work – it depends on the “overall impression” of your conduct, not the fine print.

You don’t even have to have misled anyone – as long as it can be proved that your conduct would be likely to deceive or mislead someone you may be prosecuted under the Act.

Your intentions are irrelevant – if the conduct actually misled or deceived someone, then the fact you acted honestly won’t really be a factor.

Silence can be considered misleading or deceptive – if you omit information that the other person ought to have been told, you may also be in breach of the Act; particularly if these facts were only known to you.  

A bit of puffery is okay – ‘puffery’ is generally defined as exaggeration which can’t really be quantified and which no reasonable person would ever regard as true.  For instance, “the best coffee in Brisbane” is not likely to get you into trouble under Australian consumer laws.

The other party needs to show they relied on your representation – the affected party will need to show how they suffered a monetary loss because of the misleading or deceptive statement.

Predictions about the future – are not usually considered to be misleading or deceptive.  However, if you make a promise or prediction which you knew to be false and had no genuine grounds for making it, then you may be found liable for misleading or deceptive conduct.

Examples of misleading behaviour

  • A shop says it is selling an item ‘on sale’ for $150, rather than the usual price of $300.  However, this item has never been offered at this price.
  • A person sells a mobile phone and promises that coverage will cover the buyers area knowing that it doesn’t.
  • A person sells a mobile phone with the advertisement saying it provides “full coverage around the state” when it actually doesn’t.
  • A health store sells a product which promises to reduce the person’s weight, when the product does not have that effect.
  • A mechanic promises a “full-service” at a certain price, but does not disclose that a “full service” actually only covers a bare minimum of service not what most people would regard as a “full service”.
  • A cleaning service offers a “full bond recovery service” for a rental house, but does not clean or vacuum the carpets as part of this service.

If you’re concerned that your business could be in breach of the misleading and deceptive conduct legislation you should talk to a LegalVision business lawyer today.

Lisa Lee

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