Misleading or deceptive conduct under the Australian Consumer Law is a serious offence. It erodes consumer confidence in the market and can have consequences for businesses, consumers and governments. Individuals or businesses operating in trade or commerce may engage in misleading or deceptive conduct. It is something you should seek to avoid at the risk of legal penalties and reputational consequences to your business.
You can find rules about this conduct in the Australian Consumer Law. There are many different kinds of conduct that may be misleading or deceptive due to the size and variety of the marketplace. To help explain, this article will explore some key examples of misleading or deceptive conduct in the marketplace.
What is Misleading or Deceptive Conduct?
There is no clear definition of the phrase misleading or deceptive conduct under the Australian Consumer Law. However, courts generally take the term to mean conduct that leads, or is likely to lead, a person or persons into error. This means that you need to consider the target audience of the relevant conduct. Generally, there is no requirement for the conduct to be intentional. As a result, you may fall foul of the Australian Consumer Law, even in circumstances where you did not intend to be misleading or deceptive.
The Australian Consumer Law also includes conduct that is likely to mislead or deceive. Some examples provided by the Australian Competition and Consumer Commission (ACCC) of actions that, if misrepresented, are likely to mislead or deceive include:
- representations made regarding the style, history etc. of the good or service;
- whether goods are represented as new or not;
- misrepresentations about who sponsors or advises using the good or service; and
- the purported necessity of the product or service.
Examples of Misleading and Deceptive Conduct
Due to the broad nature of the marketplace, there are many ways businesses can engage in misleading or deceptive conduct. The following is a non-exhaustive overview of behaviour that amounts to this type of conduct.
Example #1: Mobile Phone Coverage
A clear example of misleading and deceptive conduct is a telecommunications provider entering into a telephone contract with a customer while not explaining that there is no or limited phone reception where they live. This is deception through omission, as a phone consumer would expect the telecommunications company to inform them whether their area got coverage or not.
Example #2: Working From Home Scam
You may have heard of multi-level marketing schemes, where businesses will have private individuals purchase their products and resell them. In this industry, conduct is sometimes misleading and deceptive. For example, suppose a company overstates the profit you can make by working from home by selling their products, causing you to purchase many essentially worthless goods. This conduct is likely misleading and deceptive.
Example #3: Fine Print ‘Defence’
People often falsely believe that if you put something in the fine print, it cannot be misleading or deceptive. However, suppose a television advertisement states that a product will make your hair grow back in two weeks. The fine print explains that the product will not work unless you take a range of prescription drugs and creams. This conduct would likely amount to misleading conduct and deception under the Australian Consumer Law. This is because the fine print was insufficient to prevent confusion.
Example #4: Lying About a Competitors Good or Service
If you lie about a competitor’s good or service, you will likely fall foul of the Australian Consumer Law regarding misleading and deceptive conduct. This is because other parties may rely on your claims and not purchase the goods or services. This would unfairly prejudice your competitor.
Continue reading this article below the formKey Takeaways
Before deciding whether your conduct or the conduct of a competitor breaches the Australian Consumer Law, you should consider:
- what the relevant conduct is;
- whether or not the conduct will or is likely to lead another party to error; and
- who the conduct will impact.
If you have any questions about misleading and deceptive conduct under the Australian Consumer Law, contact LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.
Frequently Asked Questions
The threshold is relatively low, meaning that you can easily be found guilty of this conduct. The evidential threshold is the same as in most civil matters, meaning the balance of probabilities. This means that the standard of proof is lower than in strictly criminal matters.
The ACCC is the Australian Competition and Consumer Commission. They are a federal agency that regulates the marketplace for competition and consumer issues.
The results are varied. Whether you deserve a fine based on your conduct or even an injunction from operating in the market segment you committed the infraction in will mostly depend on the loss suffered by consumers.
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