Your business and the Australian Consumer Law – unfair business practices

The Australian Consumer Law (ACL) includes a range of protections to safeguard consumers from unfair business practices, including misleading and deceptive conduct, false or misleading representations, unconscionable conduct, and even representations about country or place of origin. Understanding what each of these terms mean can help you avoid breaching the law and the penalties applicable for those contraventions.

Misleading and deceptive conduct

Misleading and deceptive conduct is conduct that either misleads or deceives or is likely to mislead or deceive consumers. This sort of conduct is illegal regardless of any intention of a business or whether any other party has suffered loss as a result of the conduct.

In determining whether conduct would be misleading or deceptive, it is necessary to consider the overall impression that an audience would have of the goods or services on offer. It is also possible that failure to provide information in some circumstances could be misleading or deceptive. For instance, failing to advise a customer of a product’s limitations when a customer has expressed that they require the product to perform a particular task or have a particular use, might be misleading if revealing this information would change the customer’s mind about the purchase.

False or misleading representations

In addition to conduct which might be misleading or deceptive, it is illegal for businesses to make false or misleading statements about their goods or services. Similar to misleading and deceptive conduct, it is not relevant whether you have intended that a statement be false or misleading.

False or misleading statements or representations are those that are likely to create a false impression or are incorrect. It is important when advertising your goods or services that all statements are accurate and are able to be substantiated. In addition, if there is any qualification to an advertisement, then this must be clearly communicated to avoid the overall message being misleading.

In some cases, pictures used in advertising products have been found to amount to misleading representations, where those pictures have created a false impression of the products.

Some areas in which it is important to be particularly careful about statements include pricing, quality, value, and benefits associated with goods or services.

Unconscionable Conduct

Businesses must not act in an unconscionable manner when dealing with customers or other businesses. For conduct to be unconscionable, it must be more than hard commercial bargaining.

Unconscionable conduct is conduct that is harsh or oppressive, or where a known disadvantage of another party is exploited. In determining whether conduct is unconscionable, the court will take into consideration the relative bargaining strengths of the parties, whether there has been any undue influence or any other unfair tactics, and the extent to which negotiations have been conducted in good faith.

Representations about country or place of origin

The ACL recognises that a country of origin may be a contributing factor in a consumer’s decision to purchase products and therefore makes it illegal to make a false representation about the place of origin of products.

Subject to the Country of Origin Food Labelling Information Standard 2016, which was created under the ACL, there are requirements for certain information to be provided for foods. If you sell food in your business, it is important to familiarise yourself with the Standard to ensure that you are labeling foods in accordance with these requirements.

For products other than foods, so long as the representation is accurate, truthful, and clear, businesses should not be in breach of the ACL by making claims about the origin of products.

Penalties

Breaches of the ACL can be dealt with in several ways, including with substantial fines. For corporations that have breached the ACL by engaging in unconscionable conduct or making false or misleading representations, the maximum penalty is the greater of $10 million, 3 times the value of the benefit received, or 10% of the annual turnover from the previous 12 months if the court cannot determine the benefit obtained from the offense.  For individuals, the maximum penalty is $500,000.

In addition to bringing proceedings against businesses for breaches of the ACL, the Australian Competition and Consumer Commission (ACCC) can issue infringement notices for unconscionable conduct and false or misleading conduct. The penalty amount in infringement notices varies depending on the alleged contravention.

Conclusion

To avoid being on the receiving end of an infringement notice, or finding yourself in court, it is important to make sure any statements you are making about your goods and services are not misleading. Further, when negotiating terms of contracts with customers or other businesses, avoid using any unfair tactics if you are in the stronger bargaining position, and remember to act in good faith.

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