If you run a business that deals with customers or other businesses on a regular basis (yes, that’s pretty much all of us), you need to understand your obligations under the Australian Consumer Law (ACL). The ACL, found in Schedule 2 of the Competition and Consumer Act 2010, sets out a national code for consumer protection. One of the key provisions is section 18, which prohibits misleading or deceptive conduct.

Misleading Conduct Can Pop Up Anywhere

Although the prohibition against misleading conduct was initially intended to protect consumers, section 18 establishes a statutory norm of conduct that applies to business activity across the economy. In reality, it’s often competitors that complain about misleading conduct, rather than consumers or the regulator in this area, the Australian Competition and Consumer Commission (ACCC).

Commonly, misleading conduct can occur in the following situations:

  • comparative advertising (making promotional statements that compare your goods or services to those of your competitors);
  • representations made in pre-contractual negotiations;
  • making posts on social media and monitoring your social media pages; and
  • adding disclaimers to your advertising materials.

With such a broad application, it is essential to know where you stand in relation to misleading conduct.

The Elements of Misleading Conduct

To breach section 18, a person must:

  1. engage in conduct;
  2. in trade or commerce;
  3. that is misleading or deceptive or is likely to mislead or deceive.

Be aware that misleading posts on social media can be considered “in trade or commerce”.

Some Rules About Misleading Conduct

A large number of past cases have considered the finer legal points of misleading conduct. Below, we step you through some key points from those cases.

1. Likely is Enough

Section 18 extends to conduct that is “likely to mislead or deceive”. So, it is unnecessary to prove that anyone has in fact been misled.

2. Strict Liability

An intention to mislead is not an element of section 18. So a business can engage in misleading conduct even if it is acting reasonably and honestly. Of course, if a business intended to mislead, it might be easier to prove that the conduct had that effect.

3. Lead into Error

Generally, conduct that merely leads to confusion or causes someone to wonder will not be considered misleading. The question is whether the conduct would lead people into error.

4. Who Are You Calling Ordinary?

When assessing whether conduct is misleading, you need to consider the likely effect of the conduct on the ordinary, reasonable members of the target audience. So, a different standard may apply to television advertising pitched to the general public, compared to a document prepared for a sophisticated commercial party.

5. Predicting the Future

Opinions or predictions are not misleading just because they turn out to be wrong. But you might be in trouble if you make a representation about a future matter, and you don’t have a genuine and reasonable basis for making it.

6. Deception Through Silence

It is generally accepted that a failure to disclose information that may assist the other party in a commercial negotiation will not of itself breach section 18. However, silence may be misleading in circumstances where there is a reasonable expectation that information would be disclosed.

7. Passing on Information

An intermediary passing on misleading information may contravene section 18 if it creates, adopts or endorses the information. But, it will probably be safe if it just passes on the information for what it’s worth.

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If you want to confirm that your business activities do not breach the ACL, or you think that another business is being misleading, you should seek the advice of a consumer law specialist. At LegalVision, we can help you with understanding your rights and obligations under the ACL.

Questions? Please get in touch on 1300 544 755.

Thomas Kaldor

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