What are False, Misleading and Deceptive Claims?

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Table of Contents

• Australian Consumer Law (Cth)
• False and Misleading Claims and the Overall Impression
• Coles Bakery Campaign
• Maggie Beer’s Origins
• Key Takeaways

The Australian Consumer and Competition Commission (ACCC) administers laws relating to misleading, deceptive or false claims and/or statements made in business. As a business, you need to understand that any statement made about your products or services must be accurate and genuine. There are severe penalties which exist under the Australian Consumer Law (Cth) (ACL) concerning misconduct. This article will set out briefly the statutory framework of these laws and provide a couple of recent examples.   

Australian Consumer Law (Cth)

Schedule 2 of the Competition and Consumer Act 2010 (Cth) contains the ACL. Section 18 of the ACL is the general prohibition that a person must not, in the course of business, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The provision, to restate, applies broadly to conduct that is in connection with running a business that is either misleading or deceptive and extends to conduct that is likely to mislead or deceive. Importantly, it is even possible to infringe this section of the ACL innocently (i.e. without intending to).  

False and Misleading Claims and the Overall Impression

Section 29 of the ACL is an even more serious provision as far as penalties are concerned and relates to false or misleading representations made by a business about goods and/or services. It includes specific protections against false or misleading claims about:

• There being or having a particular standard, quality, style or model;
• How new they are;
• Whether they are endorsed sponsored or approved by someone (e.g. a celebrity or an industry or health organisation);
• Their performance characteristics or benefits;
• The availability of repair services or spare parts for them;
• Where they originated; and
• Whether a person needs them.

In determining when a business has engaged in conduct that breaches the ACL, the Court will assess the “overall impression” created by the conduct. It will evaluate all the material facts to the case, making each assessment of each case somewhat different. Below we set out some examples.

Coles Bakery Campaign

In June 2013, the ACCC instituted proceedings against the Coles Supermarkets Australia Pty Ltd (Coles). The ACCC alleged that Coles were in breach of the ACL in their promotion of bakery goods. The bakery products were substantially baked and then frozen outside of Coles (for example, at times, they were substantially baked in Ireland). After that, they were thawed and reheated at the Coles bakery.  The issue was in the way Coles advertised and promoted its baked goods, for example:

• “Baked Today, Sold Today”;
• “Freshly Baked In-Store”;
• “Baked Fresh”; and
• “Freshly Baked”.

In June 2014, the Federal Court of Australia (the Court) determined that Coles engaged in misleading and deceptive conduct in contravention of sections 18, 29(1) and 33 of the ACL.  In making its decision, the Court noted:

• The significance of context when determining misleading or deceptive conduct. For example, it is important to emphasise the everyday nature of the goods (i.e. people don’t invest too much time in thinking about their smaller purchases) and that the advertising was directed to the general public.

• The wording of “baked today” had no precise meaning. The words were clearly intended to convey the recency of baking in that the goods were baked that same day in-store.  

Later down the track, in April 2015, the Court ordered Coles to pay $2.5 million for its false or misleading advertising.

Maggie Beer’s Origins

In 2014, Maggie Beer Products Pty Ltd (Maggie Beer) found itself in some trouble with the ACCC and the ACL’s misleading and deceptive conduct provisions. Maggie Beer produces and sells goods such as ice-cream, extra virgin olive oil, and red wine vinegar (the delicious list does go on).  Between 2011 and 2014, Maggie Beer labelled its products with:

• “Maggie Beer a Barossa Food Tradition”; and
• “Maggie Beer Products: 2 Keith Street Tanunda South Australia 5352.”

The issue was that these products were actually made in Victoria and Queensland. The ACCC was very concerned that these representations created an overall impression that each product was manufactured in South Australia when this was in fact not the case.  

As soon as these issues were brought up by the ACCC, Maggie Beer displayed contrition for its actions by:

• Apologising unreservedly;
• Amending its labelling; and
• Providing the ACCC with a court-enforceable undertaking. The undertaking sets out the step by step process Maggie Beer would rectify the false representations and promise it would not engage in this conduct again.  

Maggie Beer was reprimanded for its conduct, but Court proceedings were not instituted.

Key Takeaways

In summary, Coles paid a full penalty for their half true representations. Secondly, it pays to be careful with statements that may cause a misunderstanding about where goods originate from. In general, if there is a serious issue, it can pay to cooperate with ACCC investigations and enquiries. The ACL and ACCC take the protection of consumers seriously – let this be a lesson in advertising your business’ goods and services! 

Questions? Get in touch with our consumer lawyers on 1300 544 755.