Despite the best efforts of all concerned, the course of advertising and selling will continue to give rise to trade practices problems. The temptation to use particular techniques may be too strong, as it may seem like other businesses are using them, and there is constant pressure to stay ahead or respond to new consumer demands. Advertisers and sellers sometimes miscalculate the legality of particular conduct.
Don’t Mislead or Deceive
Staff and representatives must take care not to mislead or deceive. It doesn’t matter whether the misrepresentation is deliberate or accidental. What does matter is the impression that is left in the mind of the customer.
The Act tells business that it must not mislead or deceive, or take actions that are likely to mislead or deceive. It also specifically outlaws particular types of false or misleading representations, such as claims about a product’s value, price, quality, place of origin or impact on the environment.
The failure to mention any matter relevant to the sale can also give rise to misleading conduct. In some circumstances silence can be conduct that misleads, or is likely to mislead.
What are misleading advertising and selling practices?
Any kind of conduct or behaviour in business that could give a customer the wrong impression may potentially breach the Trade Practises Act. Certain kinds of misrepresentations are specifically prohibited by the Act.
Disclaimers and fine print
Businesses should focus on the overall impression given to the consumer, especially when using techniques such as asterisks and associated fine print. Disclaimers should be specific, clear and highly visible. Information in the fine print should not contradict the main message. Be careful when using words such as ‘free’ or ‘unlimited’.
Product safety problems
Care must be taken to ensure that items have the level of safety people would expect in the circumstances. It is the responsibility of manufacturers, importers and retailers to ensure they don not sell goods that are unsafe or defective. If they do sell unsafe or defective goods, they must be liable for any harm caused.
Advertising that tries to directly promote the superiority of one business’ products over another’s may result in a real and deserved commercial advantage. However, comparative advertising that misleads or might mislead consumers may result in legal action by consumers, competitor’s or the ACCC. Make sure that when comparing products, you compare like with like-that is, you should only compare your product to your competitor’s most directly comparable product.
Two price advertising
Consumers are attracted to products that compare discounted prices to previous or ‘usual’ prices. However, comparisons must be realistic. The basis for calculating the discount should be clear and the prices used for comparison must be genuine and relevant. The goods must have been reasonably available at the pre-sale price before using this technique.
Country of origin
Phrases such as ‘Australian Made’ and ‘Product of Australia’ appeal to consumers who wish to support the local economy. However, these terms should not be used to mislead the public. Take care when using any logos or symbols relating to the country of origin.
Characteristics or affiliation
Make sure that any claims about your goods are accurate; for example, claims such as ‘free of genetically modified organisms’ or ‘environmentally friendly’ should be backed up. Do not claim that your product has any special sponsorship or affiliation that it does not have.
A business’ refund policy is the most visible sign of its commitments to fair customer relations. The Trade Practices Act sets down minimum entitlements for refunds, for example when the goods do not fit the particular purpose stated to the buyer.
Not showing the full cash price
The total cash price, including GST, must be revealed to the consumer before buying. You must show the full price, including any commissions, charges, or postage and handling. It is not enough just to show initial deposit and instalment payment amounts, which may result in confusion.
Retailers should not advertise goods or services at a specified price if they are aware, or should be aware that they are unable to supply reasonable quantities at that price for a reasonable period. Special offers made to draw customers to a store should be made only if customers have a fair chance of buying the advertised goods. Retailers should not use special offers with the intention of cross-selling standard-priced goods instead of the advertised special. If questioned, retailers should be able to establish that they made the offer with reasonable means of meeting the demand they expected for the advertised goods.
No intention to supply
Businesses should not accept payment if they know, or should know, that they cannot provide the kind of gods or services promised
The internet is a new and exciting medium by which small business and consumers can do business. Retailers must remember that the same standards apply when doing business over the Internet as they do in any other transaction. It's important for consumers to ensure they have basic information about the business they are dealing with, and for small business to use best practices to give consumers the confidence to trade with them.
Unsolicited advertising and directory listings
Inertia selling is when a business seeks payment for unsolicited goods or services. Unscrupulous businesses may try to place consumers (or other businesses) in a position where they will either
Inadvertently pay for unsolicited goods or services
One method is to ‘sell’ a company an entry in a (perhaps non-existent) business directory by
getting the ‘authorisation’ of a junior member of staff
sending an invoice along with a copy of the entry
The person running this scheme hopes that payment will occur in the normal course of business, and the fact that no goods or services are delivered will go unnoticed. Specific provisions are in the Act to stop business directory schemes.
Or pay for the goods as a way out of an unpleasant situation