As a business owner, advertising your products or services is a great way to draw in new customers. However, it would help to be careful not to engage in bait advertising. For instance, if you advertise low prices but intend to avoid honouring that price when a customer enquires about it. Indeed, Australian Consumer Law (ACL) makes it illegal to engage in bait advertising. This article will outline bait advertising and how to protect your business from engaging in it.
It’s now easier than ever to start a business online. But growing and sustaining an online business requires a great deal of attention and planning.
This How to Start an Online Business Manual covers all the essential topics you need to know about starting your online business.
The publication also includes eight case studies featuring leading Australian businesses and online influencers.
What is Bait Advertising?
Sometimes, a business might suggest an alternative product to the customer or ask them to purchase the original product at a higher price. Then, the business may explain the higher price by claiming they do not have enough product supply.
Keep in mind that according to ACL, a business only needs to be aware of the circumstances that would prevent them from being able to meet their advertised offer to be found breaching this law. This is a low threshold. Therefore, it is easy to catch businesses engaging in this behaviour.
Rebates, Gifts or Redemptions
If a business is providing or promoting a good or a service, it is also illegal to offer free incentives when they have no intention of making good on these offers. This might include:
- rebates;
- prizes; or
- gifts.
Case Breakdown
Consider the following case. Here, a car dealer advertised Ford Falcon XD Sedan and a Holden Commodore Sedan for sale. They offered the vehicles for sale at a special price of $2,990 in a full-page advertisement in a newspaper. The ad showed pictures of the cars and the heading said ‘$300 cash deposit or your car as a full deposit’. The car dealer advertised each one with reference to ‘$22.59 a week’. However, the advertisement’s footnote said ‘prices remain for one week’ and that ‘all vehicles in stock at the date of compiling advertisement’.
When a customer came to purchase the vehicle, the car dealership salesman said the advertisement proposals were unavailable and he would have to speak to his manager. The customer returned later that day to see the manager, at which point, another individual intercepted him, saying that he had just bought the cars.
He then offered them for sale at a higher price. The customer left and later called the dealership. He confirmed with them that the cars were, in fact, still available for purchase.
This case is a clear example of bait advertising where the dealership did not intend to offer the cars for the purchase price of $2,990. Instead, they used the offer to entice potential customers to their premises and informed them of the higher price.
How to Protect Your Business
To ensure you don ot inadvertently use bait advertising when offering special prices or promotions, you must consider offering that product for a reasonable period and in reasonable quantities.
This means that you should ask whether:
- you have sufficient stock to satisfy the anticipated consumer demand; and
- your offer is reasonable for the industry or market my business operates in.
For example, if you sell custom furniture, your promotion promising a handcrafted dining table in two days may be unrealistic and could be perceived as bait advertising.
Key Takeaways
Advertising your products and services is a great way to attract new customers. However, you should ensure you do not engage in bait advertising. Indeed, ACL outlines guidelines for advertising and makes bait advertising illegal.
If you require assistance understanding your obligations when advertising, 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
Bait advertising might include advertising low prices but not intending to honour that price when a customer enquires about it. Sometimes, a business might suggest an alternative product to the customer or ask them to purchase the original product at a higher price. Then, the business may explain the higher price by claiming they don’t have enough product supply.
If a business is providing or promoting a good or a service, it is also illegal to offer free incentives when they have no intention of making good on these offers. This might include rebates, prizes or gifts.
We appreciate your feedback – your submission has been successfully received.
