In Short
- The Australian Consumer Law (ACL) prohibits businesses from making false or misleading claims about their products or services.
- The Spam Act 2003 makes it illegal to send unsolicited commercial electronic messages without consent.
- The Australian Competition and Consumer Commission (ACCC) enforces these laws and can take action against businesses that breach them.
Tips for Businesses
Ensure all advertising claims are truthful and not misleading. Get consent before sending marketing emails or texts to comply with anti-spam laws. Avoid fine print that contradicts key advertising messages. If unsure about your obligations, seek legal advice to protect your business from potential fines or legal action.
Now that your business is up and running, it is essential to understand how you can advertise. This is integral to increasing your consumer base and growing your business. However, certain laws, such as the Australian Consumer Law, will restrict how you market your product or service. This article will explore the key legal aspects of advertising your business.
Different Forms of Advertising
There are many ways to market your business to attract customers and keep them coming back. Some inexpensive ways to start include placing an advertisement in a local newspaper. Often, you can reach various local people of all age groups and ensure you become known in the local area. This can be especially helpful if you run your business from home or in a small location that does not allow clear signage.
Additionally, consider creating flyers and doing letter box drops or putting them up on local council and library bulletin boards. Sourcing a business that can help you design and print fridge magnets to include in your flyers is an excellent way of ensuring potential customers remember your business.
Marketing your business online is another option to increase the reach of your business. Starting with an email marketing list is a great way to increase customer retention. You can promote competitions, specials and incentives to get customers to sign up either online or when they visit your business location. Creating a website and advertising on Facebook is a great way to target certain audiences.
Legal Issues When Advertising
You need to consider what you can put in your advertisements to attract customers while ensuring you do not mislead your customers.
The Australian Competition and Consumer Commission (ACCC) is the body that enforces the ACL and has rules and regulations in place to protect customers from false or misleading statements. Some things to be mindful of are making sure you do not make statements that can create the wrong impression about any aspects of your products or services. For example, you must accurately represent quality, value and price in your advertisements. You also cannot rely on the fine print to protect you from being held accountable for a misleading ad.
The best way to ensure your business follows the rules is to be clear and use simple language. Backing up your statements with evidence is also helpful, considering the overall impression of your advertising message. You should include all of the relevant information. Additionally, avoid making offers you cannot deliver on. Wildly exaggerated claims such as ‘world’s best coffee found here!’ are not considered misleading, as the statement is clearly vague and exaggerated, and no one would rely on it being accurate.
Continue reading this article below the formAdvertising the Price of your Goods or Services
When advertising the price of your product, the ACL sets specific rules. Consumers must receive the total cash price when the product’s price is part of the advertising. It is an offence to only provide consumers with part of the price without displaying the total amount a purchaser must pay. Similarly, you cannot provide consumers with one price in an advertisement when it is, in fact, subject to additional fees upon purchase. The final price must include any applicable Goods and Services Tax (GST).
Some businesses may find themselves engaging in deceptive pricing practices where their advertised ‘sale’ price is not actually priced as lower than the item’s regular price. Falsely inflating the price of goods or services to give the assertion of a sale or discounted price is deceptive and can land businesses in dangerous territory of being in breach of the ACL and subject to penalty.
Your business’ brand represents your values, identity and reputation. Learn how to create a successful brand and protect it.
Bait and Switch Advertising
Similarly to deceptive pricing, businesses cannot use bait and switch advertising to lure customers into a small number of products at a lower price, only to refer customers to higher-priced goods or services. In addition, under the ACL, it is illegal to advertise goods or services where there is a reasonable belief that the business cannot supply those same goods or services for a reasonable period. However, it is not misleading if, as a part of an advertisement, a business makes it clear to consumers that the goods or services are in short supply or the business can advertise a limited sale period.
Testimonials and Endorsements
The ACCC’s key intention for advertisements is to ensure that a business is being truthful in its promotion. This applies particularly to the use of testimonials and endorsements, whether they are paid testimonials from influencers or regular customers. For example, suppose you pay an influencer to endorse a product for your business. In this case, the business and the endorser must disclose the affiliation. Recently the ACCC has begun to focus on a range of companies advertising on social media platforms, where influencer testimonials are widespread.
In addition to disclosing payment for an endorsement, where businesses are using customer testimonials, the business must ensure that the testimonial is authentic and a genuine reflection of the opinion of the consumer providing the testimonial.
Key Takeaways
Businesses should be creative in how they advertise their products. However, businesses should always strive to be truthful in their advertising to not mislead or deceive consumers regarding their purchase. It is illegal for a business to engage in conduct that misleads or deceives or is likely to mislead or deceive consumers or other businesses, and penalties can apply. For example, in paying for promotions, endorsements or testimonials for goods or services, companies must disclose all relevant information to ensure that the consumer is made aware of the payment and avoid creating a misleading impression. Likewise, businesses should avoid overstating their goods or service unless they can substantiate the claims.
If you need help complying with advertising laws, our experienced advertising compliance lawyers can assist 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.
Frequently Asked Questions
Yes. This is important to ensure that you are being truthful to the consumer and they have all the necessary facts before purchasing the product or service.
The Australian Consumer Law (ACL) is the main body of legislation regulating how businesses market themselves online.
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