Posted on October 21, 2020
Businesses may think that the term misleading and deceptive conduct only encompasses actions or words that amount to explicit and blatant lying to consumers. However, the term is much broader than this public perception, and applies to many different behaviors of businesses in advertising and selling products.
Section 18 of the Australian Consumer Law, contained in Schedule 2 of the Competition and Consumer Act 2010, states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. But what amounts to misleading or deceptive conduct, or conduct that is likely to mislead or deceive?
In the recent case of Australian Competition and Consumer Commission v Kogan Australia Pty Ltd [2020] FCA 1004 (17 July 2020), the Federal Court of Australia held that the conduct of Kogan Australia Pty Ltd (hereafter Kogan) amounted to misleading and deceptive conduct. The relevant conduct involved Kogan advertising through both electronic direct marketing and SMS marketing messages a promotion for a 10% coupon code discount for limited period. Prior to releasing the advertising materials and sending text messages Kogan increased prices on the same products it offered the 10% discount to. The prices were subsequently increased to the original price after the promotion ended. This meant that the discount code in many instances did not result in a lower price for the consumer than what they would have otherwise paid outside of the promotional period.
The issue in dispute was not that the 10% discount itself was misleading, as the application of the coupon code to the product did result in a 10% discount from the advertised price at the relevant time. However, the practice of increasing the price of products for the sole purpose of advertising to consumers that they would receive a 10% discount on what they would otherwise pay was misleading and deceptive. As consumers would have paid a similar price for the same products outside the promotional period.
The ACCC Chair Rod Sims expressed that the ACCC had become concerned where the “advertised price reductions were not genuine savings.”
Kogan was held to have engaged in misleading and deceptive conduct in the course of the promotion.
Further, in the case of Australian Competition and Consumer Commission v viagogo AG (No 3) [2020] FCA 1423 (2 October 2020) the Court held that advertisements of viagogo AG for ticket sales constituted false or misleading representations. This case related primarily to advertisements of part-price representation, whereby viagogo advertised discounted prices that did not alert consumers or make them aware of additional costs for booking and handling fees. In some instances, the difference between the advertised price and the actual price was up to 27.6% additional for the booking fee.
Misleading and deceptive conduct can therefore apply to various ‘conduct’ including advertisements, quotations, promotions, statements, and other representations by a business or company through marketing initiatives. Even where the advertisement or promotion operates as it should practically, the message behind the promotion and the benefit it purports to provide to end-consumers should be genuine and accurate.
It is important that businesses are aware of their obligations to consumers when it comes to advertising and marketing and ensuring that same does not constitute misleading and deceptive conduct. Companies should consider these obligations under the Consumer Law particularly when preparing advertising materials and when communicating with consumers about products or promotions electronically or otherwise.
If you would like further advice or assistance in regards to your businesses advertising or sales practices, or in relation to misleading and deceptive conduct, Scanlan Carroll Solicitors are contactable on 03 9853 0311 or [email protected].
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The content of our news articles are provided for information purposes only and do not constitute legal advice. We recommend that you seek professional legal advice for your specific circumstances.
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