When advertising your business it is important to ensure the Australian Consumer Law (ACL) is complied with
This article provides a brief overview of some key compliance issues that may arise under the ACL in relation to advertising. If the ACL is not complied with, penalties may be imposed (including infringement notices or court ordered penalties).
Making false or misleading representations or claims
It is important to carefully check advertisements and promotions to ensure no false or misleading representations or claims are included. It is important to note that regardless of whether such representations or claims are intentionally false/misleading or not, if they are proven to be false or misleading the ACL will be contravened and penalties may be applied.
The legal compliance requirements for representations or claims about goods or services in advertising and promotions includes representations and claims made on websites, in social media, through radio, posters, flyers, statements made by employees, in promoting sales or service offers or in promoting your business generally.
Following are examples of matters that false or misleading representations or claims should not be made about:
• the quality, standard, composition, style, model, grade, history, previous use or value of a product;
• the standard, quality, value or grade of a service;
• the need to have a particular product or service;
• the price of products or services;
• that products are new when they are not new;
• that particular persons have purchased the product or that the product or service is sponsored;
• testimonials about a product or service.
Assessing a representation or claim
When considering whether a representation or claim is false or misleading, the overall impression of the advertisement/promotion must be considered (ie. parts of the advertisement can’t be considered in isolation). For example, if a statement in a poster is true but a picture used on the poster with the statement gives a different impression, or changes the meaning of the statement, so that the overall impression created by the advertising is misleading, then the advertisement will be considered misleading even though the statement in isolation is true.
Disclaimers and qualifications
It is also important to keep in mind that using disclaimers and fine print may not be sufficient to prevent a statement made in an advertisement from being misleading. For example, an advertisement promoting services as “Always” using “New Parts” to replace parts with fine print advising that “refurbished parts may also be used,” is unlikely to sufficiently change the overall impression that new parts are “always” used by the business, and as a result the representation is likely to be misleading.
If there are any limitations or exceptions, ensure they are clearly and prominently stated. For example, if offering a discount on logbook services during the month of March only, then this should be clearly stated, for example:
20 percent off Logbook Services in March 2023
20 percent discount applies to logbook services booked in to be completed in our workshop during the month of March 2023 only.
Avoid bait advertising
If you have only limited stock of a particular part on sale, then it is important to clearly and prominently state that limited stock is available (depending on the amount you may need to put a number on it or state that very limited stock is available). This is to avoid bait advertising which is prohibited by the ACL.
Substantiate representations or claims
When making a representation/claim it is important to consider how you can prove the representation/claim is true in the event its truth and accuracy are challenged or legal proceedings commenced against the business. It may be a good idea to keep a file of information, that can be used to verify the claim is true and accurate. For example:
• if you are making a claim that the price for a logbook service is 20 percent off for the month of March, then retaining information on the prices charged for that logbook service for the months prior to and following the discount showing a servicing price that is 20 percent higher can assist to prove the representation is true and accurate;
• if you are claiming that a part will perform to a particular standard, ensure you have the facts on file to back up the claim (for example testing you have done with the product proving the claim).
Tips for approaching advertising and promotions
When promoting goods and services advertised by your business there are some simple steps you can take that may assist with compliance, for example:
• always consider the overall impression made by the advertising/promotion (is the impression as a whole true and accurate and not misleading).
• be careful in the wording you choose and avoid using absolute words such as “best” or “most,” for example the statement “providing the ‘best’ servicing in the city,” will be difficult to substantiate as true and accurate (although providing the “best servicing in the universe” may amount to “puffery” (ie. the statement is so outlandish and exaggerated that no one could believe it to be true));
• use accurate and correct information;
• check you can substantiate a representation/claim, especially if using facts;
• make sure any limitations and exceptions are clearly and prominently stated (ie. a disclaimer in small wording is likely to be insufficient in many circumstances);
• ensure any testimonials a true and accurate (eg. written confirmation as to its truth by the person providing the testimonial);
• avoid comparative advertising unless you have very strong facts that you can verify to substantiate your claims (comparative advertising carries a high risk).
If you have any questions regarding advertising by your business, you can contact Industry Legal.
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This document is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal if you require legal advice.