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Misleading or Deceptive Conduct: What You Need to Know

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If your business deals with customers or other businesses on a regular basis, it is important that you understand your obligations under the Australian Consumer Law (ACL). The ACL aims to protect consumers and competitors in trade and commerce. One of the key provisions of the ACL prohibits misleading or deceptive conduct. Complaints about misleading and deceptive conduct can be made by: 

  • consumers;
  • the regulator of the ACL, the Australian Competition and Consumer Commission (ACCC); and
  • other competing businesses. 

This article sets out:

  • what misleading or deceptive conduct is; and 
  • how it can apply in practice. 

The Elements of Misleading Conduct

Misleading or deceptive conduct is where a person engages in conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive.

‘In trade or commerce’ has a broad definition. 

For example, both charities and social media ‘influencers’ may be considered to be acting in trade or commerce. 

Misleading or deceptive conduct can occur in situations including:

  • advertising products with incorrect pricing;  
  • inaccurate comparative advertising (i.e. making promotional statements that compare your goods or services to those of your competitors);
  • false statements made by sales representatives before entering contracts; or
  • using small and unnoticeable disclaimers which consumers are unlikely to see.

Am I Being Misleading?

When determining whether conduct is misleading or not, you should take all surrounding circumstances into account. 

For example, if you misquoted the price of your services to a customer but quickly corrected yourself, all of the statements you made in this context would be considered. 

Generally, conduct that merely leads to confusion or causes someone to wonder will not be considered misleading. The key question is whether the conduct induces, or is capable of inducing, a person into error. 

An intention to mislead is not necessary in misleading and deceptive conduct. This means that a business can engage in misleading conduct even if it is acting reasonably and honestly. Of course, if a business intends to mislead their consumers, it may be easier to prove that their conduct has that effect.

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Some Common Mistakes 

There are a number of common mistakes businesses make regarding misleading and deceptive conduct. Several of these common mistakes are set out below. 

1. Deception Through Silence

It is important to remember that you may be misleading because of what you fail to say, as well as what you say. Businesses can mislead consumers by failing to give relevant information. 

For example, your silence may be misleading where: 

  • a consumer is unlikely to have purchased a product had they known certain information; or 
  • a change in circumstances means certain information you already provided is no longer correct. 

Whether silence is misleading will depend on the particular circumstances and whether the consumer had a reasonable expectation that you would disclose the relevant information.

2. Actions of Third Parties

Depending upon the facts and circumstances of the situation, there is a risk that you could be held responsible for material published by third parties on your website or social media page that has misled and deceived consumers. 

For example, a consumer may leave a review on your Facebook page saying that your cleaning product is cheaper and more environmentally friendly than your competitors. If this is incorrect, you may be liable for misleading and deceptive conduct. 

Where it is within your control to do so, you should regularly check that any information provided by your consumers or other third parties on your pages is accurate. If you find inaccurate information, you should remove it immediately. You may wish to implement policies to regularly review user-generated content to ensure it is not misleading. 

3. Disclaimers

Using a disclaimer does not excuse any misleading statements you have made. Instead, a disclaimer will be considered as part of the surrounding circumstances when assessing whether a statement is misleading or deceptive. 

For example, a consumer is unlikely to be misled if an advertisement is promoting a store sale and there is a clear and prominent disclaimer stating that the sale is running for a period of two weeks only. However, a consumer could be led into error if the advertisement reads ‘absolutely everything in store is on sale’ and there is a tiny disclaimer on the bottom of the advertisement stating that ‘only men’s shirts are on sale’. 

Whether a disclaimer is effective will depend on how likely a consumer is to see and understand it. This often depends on factors such as placement, font colour, size and the strength of the misleading statement. 

Key Takeaways

The ACL provides various remedies to consumers for misleading or deceptive conduct, including compensation. The ACCC can also order businesses to pay penalties and undertake rehabilitative action such as ACL training to ensure they do not engage in further misleading conduct. 

This conduct is interpreted broadly and is taken very seriously by both the courts and the ACCC. Therefore, it is important that you understand your obligations and pay close attention to your business practices to ensure you are not making any misleading statements. This is particularly important when considering your marketing material, such as website content, TV advertisements and digital marketing. 

If you want to confirm that your business activities do not breach the ACL, or you think that another business is being misleading, contact LegalVision’s consumer lawyers on 1300 544 755 or fill out the form on this page.

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