“A liar knows that he is a liar, but he who speaks mere portions of truth in order to deceive is a craftsman of destruction”
Criss Jami, American poet, existentialist philosopher and song writer
The Australia Consumer Law contains a general prohibition against misleading and deceptive conduct (the sanitised term for lies, fibs and deceitful conduct). Many representations are made to us every day. For example, turn on the TV and you will be inundated with various claims and assertions. Our commercial litigation team can advise you about whether specific statements contravene the law where you feel the line has been crossed, whether disclaimer clauses are or are not effective, how to calculate any loss or damage you may have suffered and will then aggressively proceed to enforce your rights in this area.
What is misleading?
Misleading conduct is conduct such as a representation, an advertisement, a statement and in certain circumstances, silence, which is found on an objective standard as being likely to lead a person into error.
Misleading conduct does not require the person to have any intention to mislead. Furthermore, whether a person was actually mislead is irrelevant in determining whether or not conduct is misleading. This is why the ACCC can prosecute business owners for misleading advertising without having to prove that anyone was actually mislead by it.
Depending on the circumstances, creating confusion can be misleading conduct. Misleading and deceptive conduct does not have to be overt and it can include actions and not just words.
A person can engage in misleading and deceptive conduct by mere silence or omission, i.e. keeping quite where the silence results is a third party being mislead. The key to determining whether silence is misleading is to look at whether there is a reasonable expectation that a certain matter or fact would be disclosed.
But how will courts evaluate whether or not conduct is misleading?
A court has found that the test should consider the effect on a person who is of “somewhat less than average intelligence” but not a “quite unusually stupid” person. So if you need to be a genius to not be confused into thinking that your product is that of your competitor you might want to rethink that particular marketing campaign. Not all judges have followed this approach and some have found that you need to consider a wider class of people, which may well include the less astute.
“Puffery”, however, is conduct that is so outrageous that nobody would be lead into error by it. For example, a statement that the hamburgers at your restaurant chain are so good that Elvis Presley always eats there when he’s in town. As such, obvious puffery is incapable of being misleading according to the objective standard.
Misleading information about price
Courts have traditionally been sensitive about misleading information concerning price since it is hardly fair that consumers be seduced into choosing your competitor on the basis that their product is cheaper only to be hit by hidden charges and conditions.
For example, if a competitor was advertising their product at a price EXCLUSIVE of GST (without expressly saying so) and this was likely to mislead potential customers into choosing their product over yours, then you may be able to obtain an injection preventing the competitor from neglecting to advertise GST and in a highly competitive price sensitive market this could make a significant difference to consumers. Our expert commercial litigation team can advise you about, and if necessary, act to prevent, conduct which misleads consumers about price.
Don’t give “free kicks” to competitors
Some examples of conduct you should eliminate from your business:
- False testimonials – ensure that there are no inaccuracies on your website including video testimonials, Facebook, LinkedIn, Twitter, Google Maps, consumer review apps etc as there are specific legislative prohibitions against false testimonials and substantial fines for companies and individuals who use them
- Small print and disclaimers – where minor details contradict the overall impression that could constitute misleading conduct. Ensure you don’t use this technique as you can’t necessarily rely on a disclaimer to prevent a document from being misleading, especially where it is in small print
- Silence – speak out if you must. If you or your staff allow a customer to buy a product which is unsuitable for their situation (eg boat parts which not compatible with their boat when you know what kind of boat they own and that the parts won’t work) and you don’t prevent them that can be taken to be misleading and you could be fined or worse
Consequences if a person is mislead and deceived
If a person is mislead or deceived then there are numerous consequences for the wrongdoer pursuant to section 18 of the Australian Consumer Law
- A court can award damages to a person who suffers loss or damage because of the misleading and deceptive conduct provided (generally) if the action is brought within six years of when loss or damage was suffered;
- A court can grant an injunction is a court order requiring the wrong doer to do something or refrain from doing something; or
- A court power can, in certain circumstances, make orders against the contravening person requiring such person to compensate the person who has brought the claim, regardless of whether that claimant has suffered injury or is likely to.