Deceptive and Misleading Conduct

 

Everybody has at least once in their lives bought or looked at buying a product, that upon examination did not quite meet the description, or was different in some way from that advertised. With luck the discrepancies were noticed before the purchase was finalised, but it is irritating to the customer and more importantly the behaviour in question can lead to severe penalties if it comes to the attention of (or is brought to the attention of) the relevant regulator, as can be done by any consumer.

All businesses need to be very careful that any advertising material, or statements made by staff in the course of trade are not deceptive or misleading in content. Get this wrong and they risk breaching the Australian Consumer Law.

The Australian Consumer Law makes it illegal for a business to engage in conduct that misleads or deceives or is likely to mislead or deceive consumers or other businesses. Importantly, this law applies even if they did not intend to mislead or deceive anyone or no one has suffered any loss or damage as a result of the business conduct in question.

As an example, a customer is deciding whether to buy a new camera and seeks advice from staff in the electronics section of a department store. The customer mentions the brand of camera they have looked at, and buys the camera on the advice of the retailers staff. However, the camera purchased is in fact not capable of taking the type or quality of pictures required.

The retail assistant knew the camera in question was not capable (of taking the required type and quality of pictures) yet did not advise the customer about this. Their conduct might be considered misleading by silence or omission as they did not disclose information that would have significantly changed the customer’s mind about buying the product.

In another (real life) example, an internet service provider offered ‘unlimited’ download plans for users who signed up to their services. However, in reality the plans purchased were subject to major limitations including speed reductions when a certain amount of data was downloaded. The internet service provider was taken to court, where the court found that the use of the term ‘unlimited’ in relation to plans that were subject to major limitations that were not disclosed, was misleading and deceptive conduct.  In this case the internet service provider was ordered to pay a penalty of $3.6 million dollars.

In order to avoid this type of conduct and possible penalties, it is important to ensure that that businesses and their staff:

  • Know what products (or services) can and just as importantly, cannot do;
  • Check advertising material for accuracy (as regards descriptions of good or services, limitations and price);
  • Educate themselves and their staff on the obligations under the Australian Consumer Law (there is material available on-line); and
  • Do not use deceptive or misleading statements when selling products or services either in person or via advertising.

The list above is not meant to be comprehensive and is a guide. If you are unsure of your obligations in regards to the Australian Consumer Law you should seek advice from a commercial lawyer who has knowledge of the issues involved and of the relevant legislation. It may be a cheap investment.