Australian Consumer Law and Misleading and Deceptive Advertisements

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As a consumer you need to be aware and cautious of what you are purchasing, the claims about the good or service you are receiving and the rights you have as a consumer in Australia. Here you will learn all about  Australian consumer law, the rights you have as a consumer and the effect of misleading and deceptive advertisements where we introduce a case study that focuses on misleading and deceptive advertisements.

What is Australian Consumer Law (ACL)?

Australian Consumer Law (ACL) applies to all states and territories and to all businesses operating in Australia. It protects both consumers and businesses in areas such as:

  • Unfair contract terms;
  • Guaranteeing consumer rights when buying goods and services;
  • It is a product safety law and is an enforcement system;
  • ACL covers unsolicited consumer agreements covering door-to-door sales and telephone sales;
  • It includes simple national rules for lay-by agreements; and
  • Penalties, enforcement powers and consumer redress options (consumer law, 2020)

ACL is a law administered by the Australian Competition and Consumer Commission or more commonly known as its abbreviation, the ACCC, alongside state and territory consumer protection agencies and can be enforced in courts and tribunals.

So what does the ACCC actually do? 

In simple terms, the ACCC takes action to ensure Australian markets are functioning properly, also protecting competition within markets, improving consumer welfare and they aim to stop any anti-competitive or harmful conducts against consumers.

Now let’s get into the part most people are here for!

Consumer Rights

The Rights of a Consumer

ACL protects consumers in multiple areas. These areas include:

  • Unfair contract terms, covering standard form consumer contracts
  • Consumer rights when buying goods and services
  • Product safety
  • Unsolicited consumer agreements covering door-to-door sales and telephone sales
  • Lay-by agreements (Consumer Law Australia) 

Although ACL protects consumers in all of the areas above, it also requires all businesses to provide consumer guarantees for most of the goods and services they sell. This is where many consumers get confused when it comes to their rights and why there may be some misunderstandings. 

What are consumer guarantees? And what is the difference between consumer rights and consumer guarantees?

Consumer guarantees are rules that cover goods and services bought by consumers under ACL and are in place to ensure businesses issue a remedy or solution to their consumers. When you buy a product (good or service) there is a guarantee that the product will perform in the way it was intended. If the product does not perform in the way it was advertised you have consumer rights. 

Consumer guarantees under ACL require Australian businesses to install a policy which often comes in the form of a refund, exchange or a credit note type of policy for faulty/damaged or change of mind on goods or services. It is the business’ way of issuing a solution to its customers. It is under your consumer rights to be offered a solution if you purchase a product which was falsely advertised or has a form of fault.

Consumer guarantees and consumer rights are in place to support both consumers and businesses. Consumer guarantees are set in place in order to resolve any issues that may arise when a consumer purchases a product from a business. In saying this, consumer guarantees cover businesses and consumer rights cover customers who have purchased products that have had some sort of fault.

Misleading and Deceptive Advertisements

As a consumer, it is very important to be aware of advertisements, especially with what the business claims they provide in their services, or the claims the business makes about their goods. A misleading and/or deceptive claim  from a good or service could harm or cause injury to a consumer if important information is accidentally or purposefully left out. It is also important for consumers to also check claims for example through checking reviews or services, or checking the ingredients list before consuming the food item to ensure you are receiving what it claims to provide.

What is a misleading and deceptive advertisement?

An advertisement is misleading if it includes false, misleading or deceptive information. An advertisement can also be considered misleading if important information that is needed to make an informed decision is left out.

It is very important to note the forms of advertisements and examples of misleading and deceptive advertisements in order to pick out errors in advertising by other businesses.

Forms of advertisements include:

  • TV commercials
  • Radio commercials
  • Posters/billboards
  • Social media posts
  • In-store signage
  • Catalogues

So now let’s take a look at a case study that uses all the concepts mentioned above.

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] 

In 2014, the ACCC had taken Coles Supermarkets Australia Pty Limited (Coles) to federal court claiming that they were involved in misleading conduct in the form of misleading and deceptive advertising. This action was created due to the discovery of false slogans that Coles bread was being “Baked Today, Sold Today”, “Freshly Baked”, “Baked Fresh”, “Freshly Baked In-Store” and “Coles Bakery”. This action was taken against Coles because it was discovered that some of the breads Coles were selling were coming into the store par-baked. This meant that they were being made, then half baked and frozen at a different location from where the bread would arrive to then be baked once more before going onto shelves, sold as “freshly baked”. 

The federal court discovered that these claims were falsely advertised and saw that there were misleading and deceptive advertising claims on their par-baked bread products as the claims had broken Section 18(I) of ACL that stated: “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive” (ACL). The ACCC argued that Coles had also broken Section 29(I)(a) of ACL which states “A person must not in trade or commerce, in connection with the supply or possible supply of goods or services, or in connection with the promotion by any means of the supply or use of goods or services: (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use”(ACL). It was also argued that Coles had broken Section 33 of the ACL which provides that “A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, the characteristics, the suitability for their purpose, or the quantity of any goods” (ACL).

In a statement, Coles said it did not “deliberately set out to mislead anybody” but accepted “we could have done a better job explaining how these products are made”.

It was concluded that Coles had in fact broken Section (18)(I), Section 29(I)(a) and Section (33). This resulted in Coles being fined a penalty of $2.5 million dollars for misleading marketing campaigns claiming that their bread products were “baked today” or “freshly baked in-store” when in fact they were partially baked off site and not made fresh in store as the claims suggested. It was also ordered that Coles post a notice on their website and in their stores for a period of 90 days admitting to false statements of their Coles bread. All signage was ordered to be removed immediately across all stores that made reference to Coles bakeries or their “fresh bread” and a ban of 3 years was set stating that Coles was not allowed to advertise their bread products. In this case, Coles was very lucky that they did not cause any harm to any of their customers who had consumed their breads.

As we have seen above with the Coles case study, as a business you must be cautious of the wording you use to promote your goods or services. It is also very important to cross check facts and promotions before submitting them to the public, because as seen with the Coles case, Coles had stated that they did not deliberately intend to mislead or deceive their customers, but due to improper reviewing of their marketing campaigns, they were found to be misleading and deceiving their customers and heavily fined. Due to this, Coles lost the trust of their loyal customers. It is also very important to be aware as a consumer of the products you purchase, ensuring you read the fine print and of course the label and it’s claims. By doing this you are able to be assured and satisfied with your purchase also avoiding any harm you could cause to yourself or others in the form of a reaction if consumed or harmed, in the form of improper use of your purchase.

References

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634, https://jade.io/article/336796?at.hl=coles+fresh+bread

Australian Competition & Consumer Commission 2020, “About the ACCC”, Australian Competition & Consumer Commission, Canberra, viewed 26th of March 2020, https://www.accc.gov.au/about-us/australian-competition-consumer-commission/about-the-accc#our-purpose

Australian Competition & Consumer Commission 2020, “Consumer Guarantees”, Australian Competition & Consumer Commission, Canberra, viewed 26th of March 2020, https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-guarantees

Australian Competition & Consumer Commission 2020, “Consumers’ Rights & Obligations”, Australian Competition & Consumer Commission, Canberra, viewed 26th of March 2020, https://www.accc.gov.au/business/treating-customers-fairly/consumers-rights-obligations

Australian Competition & Consumer Commission 2020, “False or Misleading Claims”, Australian Competition & Consumer Commission, Canberra, viewed 26th of March 2020, https://www.accc.gov.au/consumers/advertising-promotions/false-or-misleading-claims#false-or-misleading-advertising

Australian Consumer Law 2020, “The Australian Consumer Law”, Australian Consumer Law, Canberra, viewed 26th of March 2020, https://consumerlaw.gov.au/australian-consumer-law

Stephen, C, & Professor, PC 2015, “Australian Consumer Law: Commentary & Materials”, Thomson Reuters (Professional) Australia Pty Limited, Sydney., Chapter 3, pg.91, chapter 5, pg. 230, chapter 8 pg.347-348, Available from: ProQuest Ebook Central. [accessed 1st of May 2020].

Wells, J 2014, “Coles banned from advertising frozen bread as ‘Freshly Baked'”, [online], ABC News, 29th September, viewed 26th of April, 2020, https://www.abc.net.au/news/2014-09-29/coles-banned-from-advertising-frozen-bread-as-freshly-baked/5776650

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