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Misleading and deceptive conduct is conduct that is likely to mislead or deceive. Section 18 of the Australian Consumer Law (ACL), provides that “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

Under this Act, a person in business must not engage in conduct which is misleading or deceptive.  This covers conduct including:

  • your advertisements;
  • any promotions you publish; and
  • anything you say or promise to someone in the course of trade or commerce.

So if you mislead someone about your price, value or what good/services you are offering you may have breached the Act.

Examples of Misleading Behaviour

  • A shop says it is selling an item ‘on sale’ for $150, rather than the usual price of $300.  However, this item has never been offered at this price.
  • A person sells a mobile phone and promises that coverage will cover the buyer’s area knowing that it doesn’t.
  • A person sells a mobile phone with the advertisement saying it provides “full coverage around the state” when it actually doesn’t.
  • A health store sells a product which promises to reduce the person’s weight when the product does not have that effect.
  • A mechanic promises a “full-service” at a certain price, but does not disclose that a “full service” actually only covers a bare minimum of service not what most people would regard as a “full service”.
  • A cleaning service offers a “full bond recovery service” for a rental house, but does not clean or vacuum the carpets as part of this service.

How Courts Determine ‘Misleading and Deceptive Conduct’

It is up to the courts to determine whether certain conduct falls within that statutory definition. When doing so, courts consider a number of things, including the following:

Silence Can Amount to Misleading and Deceptive Conduct

Here, the court will examine the context in which the silence occurred. If, for example, a vendor of a business took a potential purchaser through 95% of the trade debts of a company, but omitted the largest one, that silence as to the debt may amount to misleading and deceptive conduct. This can also arise when a person has made a statement but fails to qualify it sufficiently.

The Conduct at the Time of Occurrence

The courts have found that making a promise and then later not keeping it is not misleading conduct unless the promise was not genuinely made in the first place. When considering this, the relevant time of examination is the time that the promise was made. Accordingly, if the misleading conduct consists of making a statement about the future, the person making the statement can defend by proving that he or she had reasonable grounds for believing that the prediction was correct, even if that transpired not to be the case.

A ‘Mere Conduit’ Will Not Be Liable

If a person is simply passing on information, and it ought to be clear to the receiving party this is the case, they will not be liable for breach of this statutory provision.

There Need Not Be an Intention to Mislead

While ‘deception’ by its nature, involves a guilty mind, this is not the case with misleading, and a party can be liable even if the misleading conduct was unintentional.

The Conduct Must Be ‘In Trade or Commerce’ to Attract the Section

Courts look at the context of the conduct, as the false or misleading statement must have been done ‘in trade or commerce’ for the Act to apply.

E.g. stating on an Internet dating profile that you have ‘the body of an Adonis’ may indeed be false and mislead poor unsuspecting persons to date you, but is not an action done in trade nor commerce and, thus, would not attract the provision of section 18 of the ACL (but you probably shouldn’t do this anyway!).

Penalties

Businesses face a number of steep penalties under the Act if they are found to have misled or deceived someone in the course of their business. Misleading and deceptive conduct can lead to civil actions including:

  • Having to pay compensation orders.
  • Awards in damages against you (which means you have to pay more than just compensation for the other side’s loss).
  • Being disqualified from operating a business.

So follow these tips to help you avoid misleading and deceptive conduct claims.

Disclaimers don’t necessarily work – it depends on the “overall impression” of your conduct, not the fine print.

You don’t even have to have misled anyone – as long as it can be proved that your conduct would be likely to deceive or mislead someone you may be prosecuted under the Act.

Your intentions are irrelevant – if the conduct actually misled or deceived someone, then the fact you acted honestly won’t really be a factor.

Silence can be considered misleading or deceptive – if you omit information that the other person ought to have been told, you may also be in breach of the Act; particularly if these facts were only known to you.  

A bit of puffery is okay – ‘puffery’ is generally defined as exaggeration which can’t really be quantified and which no reasonable person would ever regard as true.  For instance, “the best coffee in Brisbane” is not likely to get you into trouble under Australian consumer laws.

The other party needs to show they relied on your representation – the affected party will need to show how they suffered a monetary loss because of the misleading or deceptive statement.

Predictions about the future – are not usually considered to be misleading or deceptive.  However, if you make a promise or prediction which you knew to be false and had no genuine grounds for making it, then you may be found liable for misleading or deceptive conduct.

Key Takeaways

If you have been damaged by another’s misleading and/ or deceptive conduct, or are concerned about your own liability, you should consult a commercial lawyer, call LegalVision on 1300 544 755.

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