Marketing in Australia is subject to various laws and regulations designed to protect consumers, promote fair competition, and ensure truthful and transparent advertising practices. Here are some fundamental advertising laws in Australia: –
1. Australian Consumer Law 1 (ACL)
The ACL is the primary legislation that governs consumer protection in Australia, including truth in advertising. The ACL applies to all businesses and covers product claims, pricing, warranties, consumer guarantees, and representations about goods or services. It prohibits misleading or deceptive conduct, false representations, and unfair practices in advertising and marketing.
You and your business may thus be able to seek redress against a supplier’s contravention of the ACL’s general prohibitions of misleading and deceptive conduct or their breach of the specific prohibitions of:
- bait advertising,
- false or misleading representations about goods or services,
- misleading conduct regarding the nature of goods or services, or
- misleading conduct about particular business activities.
2. Misleading and Deceptive Conduct under the ACL
Depending on the facts and the evidence, you may have grounds for seeking redress against the supplier under the ACL for misleading and deceptive advertising under Australian advertising laws, and you should get advice from a business lawyer.
Fear not, advertisers, you may still use exaggerated claims in ads so long as they are so crazy that no sane person could believe them. The law calls this ‘mere puffery’. A slogan like ‘We have the best burritos this side of Bogota’ is OK because it’s puffery, but ‘Our burritos will cure COVID’ is right out! Get legal advice for the many shades of claim between the two extremes.
Through recent case law, the definitions of misleading or deceptive advertising are becoming broader and stricter. Therefore, advertisers must be aware of several streams of possibly deceptive communications. It would be best if an advertiser makes sure that a comparison with a competing product is of the same type and capacity. Dodgy quality claims could attract unwelcome attention, likewise with dodgy and deceptive ‘fine print’, which substantially undermines the headline claim or price quote.
Testimonials or reviews on websites and social media are now a big part of corporate interactions with consumers, so even they can be scrutinised to see if they are fake. Also, even genuine ‘influencers’ can be found to breach the prohibition of misleading and deceptive conduct when they make recommendations regarding goods or services without disclosing their relationships with the supplier. The ACCC has stepped up its social media surveillance and enforcement program recently.
3. The Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act)
The ASIC Act regulates advertising and marketing in the financial sector with provisions similar to the ACL. It prohibits misleading or deceptive statements in advertisements for financial products or services. The Act also sets out disclosure requirements for advertisements of financial products or advice and prohibits unconscionable conduct concerning financial services.
4. Recent Cases of Misleading and Deceptive Conduct
Recent ACL cases involving misleading claims in advertising include those brought by the Australian Competition and Consumer Commission (ACCC) against: –
- Samsung for misleading claims in advertising overstating their Galaxy phones’ water resistance. They were fined $14 million for suggesting you could surf with one of their phones. As usual, the devil is in the details, and it turns out that salt water corrodes phone charging ports.2
- Dell Australia for misleading pricing and discount claims when selling monitors ‘bundled’ with PCs. They were inflating the retail price to make the discount price look relatively cheaper than it was. 3
- Meg’s Flowers deceptively suggested they were a ‘local florist’ through Google advertising, which tailored ads to use the localities of consumers searching the web for florists. Meg’s were not local florists or even using local florists; instead, they dispatched flowers from centralised warehouses. Under an agreement with the ACCC, Meg’s changed their web advertising. Since the ACCC order against Meg’s, other similar florist businesses have also had to modify their web advertising. 4
- Employsure Australia structured their Google advertising so that people searching for terms like ‘Fair Work’ would be presented with ads and links that gave the impression they were getting government-provided information through the Fair Work Commission. The Full Federal Court imposed a $3 million penalty on Employsure Australia for making false or misleading representations in its online ads. 5
5. Consumer Guarantees under the ACL
Mandatory ‘consumer guarantees’ under the ACL include a guarantee that goods or services supplied are fit for any disclosed purpose and that goods supplied match the description and any sample or demonstration model. 6 These requirements should also inform any advertising or marketing activities your business may undertake.
A ‘consumer’ under the ACL is not only a consumer of goods or services for personal, domestic, or household use. Now, anyone who purchases goods or services for up to $40,000 is a ‘consumer’ except purchasers of financial products, financial services, or trucks.
6. The Competition and Consumer Act 2010 (Cth)
The Competition and Consumer Act 2010 also includes prohibitions related to anti-competitive behaviour.7 It regulates business practices that may harm or prevent competition in a market and artificially drive-up prices for goods and services, such as anti-competitive pricing strategies. It supplements false advertising laws Australia.
The Act’s regulations include a Franchising Code of Conduct to regulate franchise agreements.8 Before entering a franchise agreement, the franchisor must give a prospective franchisee a key facts sheet, an information statement and a disclosure document informing a franchisee or prospective franchisee with its content, type, and form prescribed by the Code.
Over time, the government increased franchisor obligations to supply prospective franchisees with critical information relating to a franchise. Such disclosure obligations can cut across possible advertising and marketing spin about the business proposition underlying a franchise.
Suppose you are considering getting a franchise. In that case, you should get specific advice from a business lawyer about your rights and responsibilities to receive complete and correct information about the franchise business.
7. Unconscionable Conduct at Common Law and the ACL
False or misleading advertisements may also be ‘unconscionable’ when they are exceedingly unfair and predatory, and consumers or businesses act or rely upon the advertisement’s messages to their detriment. The ACL and the common law prohibit ‘unconscionable’ conduct, where a person ripped off is demonstrably at a special disadvantage, even if they have signed a contract or made an agreement. However, the Australian Consumer Law also prohibits a new version of unconscionable conduct of someone being significantly ripped off by a predatory person or business, and consumer vulnerability isn’t involved. 9 Recent court decisions have reinforced the availability of this remedy for small businesses, as discussed in our previous blog. 10
The ACL does not define ‘unconscionable conduct.’ However, recent court judgments interpret it as “conduct that is so far outside norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience“. 11 Since statutory unconscionable conduct under the ACL must be assessed “in all the circumstances,” any finding of whether or not conduct falls within the scope of the prohibition will depend very much on the facts at hand. It would be best to contact a business lawyer to discuss the specifics of your complaint about an advertisement and the surrounding circumstances.
8. Privacy Act 1988 (Cth)
The Act governs the collection, use, and disclosure of personal information. It establishes principles for handling personal data and sets requirements for obtaining consent, providing privacy notices, and safeguarding personal information in marketing activities.
The Commonwealth Privacy Act 1988 only applies to businesses that:
- Have an annual turnover greater than $3 million, or
- Trade in personal information, or
- Provide healthcare, or
- Perform service contracts for the Commonwealth Government, or
- Provide credit reports, or
- Provide telecommunications, or
- Maintain tenancy databases, or
- Are covered by money-laundering laws.
Suppose you fit into any of these categories or think you might. In that case, you should get advice from a business lawyer about compliance with the Privacy Principles in the Act and applicable NSW laws and regulations.
9. Spam Act 2003 (Cth), telemarketing, and door-to-door sales
The Spam Act regulates the sending of commercial electronic messages, including email, SMS, and instant messaging. It requires businesses to obtain consent from recipients before sending commercial electronic messages and mandates, including specific information and ‘unsubscribe’ mechanisms in those messages.
The Australian Consumer Law also prohibits telemarketers from calling outside the hours of 9 am to 8 pm during the week or 9 am to 5 pm on Saturdays. Hawkers, peddlers, and other door-to-door salespeople are not allowed to come knocking outside the hours of 9 am to 6 pm weekdays or 9 am to 5 pm on Saturdays. Some things are still sacred, and Sunday is a no-contact day.
10. State and Territory Fair Trading Acts
Each Australian State and Territory has its fair trading legislation, which complements the national consumer laws. These acts provide additional consumer protections and regulate various aspects of marketing and advertising, including unfair business practices, false or misleading representations, and consumer rights.
11. False Advertising Laws Australia
It’s important to note that the laws and regulations governing marketing in Australia can be complex and subject to change. Businesses engaging in marketing activities should ensure compliance with these laws to avoid legal issues, regulatory penalties, or reputational damage, including having advertising copy checked for legal compliance before circulation. It is advisable to consult with legal professionals or seek guidance from relevant government authorities, such as the Australian Competition and Consumer Commission (ACCC) or the Australian Communications and Media Authority (ACMA), for specific and up-to-date advice on marketing practices in Australia.
Contact us today for a free initial discussion with a business lawyer regarding your advertising or case in this area of law.
Legal references:
- Schedule 2 of the Competition and Consumer Act 2010 (Cth),
- ACCC v Samsung Electronics Australia [2022] FCA 875
- ACCC v Dell Computers Pty Ltd [2002] FCAFC 434
- ACCC v Meg’s Flowers Pty Ltd [2023] NCF1
- Australian Competition and Consumer Commission v Employsure Pty Ltd [2023] FCAFC 5
- Australian Consumer Law, Part 3-2, Division 1, Consumer Guarantees
- Competition and Consumer Act 2010 (Cth), Part IV – Restrictive Trade Practices,
- Competition and Consumer (Industry Codes—Franchising) Regulation 2014 – Schedule 1.
- Australian Consumer Law, section 21(4)(b)
- ACCC v Quantum Housing Group Pty Ltd [2021] FCAFC 40 (19 March 2021) and ACCC v Telstra [2021] FCA 502 (13 May 2021),
- ASIC v Kobelt [2019] HCA 18, [92] (Gageler J).
