Separating your business from the pack is a major challenge. It can be tempting to make claims about your product or service that stretch the truth to get customers through the door.
Before making any claim regarding the product or service provided by your business, you need to ensure you are not engaging in misleading and deceptive conduct.
What you need to know about misleading and deceptive conduct
You may be liable for misleading and deceptive conduct if your business makes statements that are incorrect or likely to create a false impression. Section 18 of the Competition and Consumer Act 2010 stipulates:
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
This more often occurs when you begin advertising your product or service and seek to represent it as favourably as you possibly can.
It includes any statement:
- Made in any media (television, social media, print);
- On the product package;
- Made by a person representing your business.
Aspects of your business you may not make false or misleading statements about include:
- The quality of your product or service;
- The value of your product or service;
- Any associated guarantee or warranty;
- Testimonials that are fraudulent or unverified.
The primary way to evaluate whether you are engaging in misleading and deceptive conduct in the course of your business is to consider whether the ‘overall impression’ created by your business is false or inaccurate.
What you can’t do
Rely on disclaimers
Your business can’t make a misleading claim even if you have a disclaimer in fine print. For example, if you advertise that parking at your restaurant is free but the fine print indicates that payment must be made, you may be liable for misleading and deceptive conduct.
Bait advertising
Your business may not advertise that your goods are a specific price if the goods are either not available at that price, or only a limited quantity of goods are available at the specified price.
For example, if you advertise that you serve steak at lunch time for $5, but only do so for a limited number of customers, you may be considered to be engaging in misleading and deceptive conduct.
Country of Origin
Your business cannot falsely advertise that your goods are from a country that they are not from. For example, you can’t advertise that the wine your restaurant serves has been flown in from France if it has not been.
What you can do
As a business owner, there are a number of advertising tactics you can utilise which do not constitute misleading and deceptive conduct.
Puffery
Making wildly exaggerated claims, often referred to as ‘puffery’ does not constitute misleading and deceptive conduct. For example, if you were to claim that your restaurant has the best service on the face of the planet, you’re likely not to be considered to be engaging in misleading and deceptive conduct.
Comparative Advertising
Claiming that the service in your restaurant is superior to the restaurant next door is not considered misleading if you can prove that it is accurate.
For example, if the restaurant next door has lower prices, better quality, and a greater range but your restaurant has better service, you can advertise your service as being superior to the restaurant next door.
Premium (or credence) claims
Claiming the food at your restaurant offers a moral or social benefit, such as serving ‘free range eggs’ is permitted as long as you can substantiate your claim.
Still unsure if you are engaging in misleading and deceptive conduct? Contact a LawPath consultant on 1800 529 728 to get fixed price quotes to get advice from an experienced contract lawyer specific to your case.
