Misleading Conduct and Marketing: The Rules of Proper Promotion

Marketing: it’s effectively the basis of all successful businesses.  Whether you’re selling goods or services, your success depends on your customer or client base.  And building that client base is impossible without some form of publicity.  Often, the best marketing and advertising campaigns are creative.  They give products some distinction: an edge that stands out from competitors.  A lot of the time, successful marketing campaigns encourage some imagination.  But when does that creative licence cross the line into misleading conduct?

When it comes to marketing and promotion, the law has drawn a line.  On one side, there is creativity.  The law has no issue with promotion that encourages consumers to use their imagination a little.  On the other side, though, there is deception.  Promotional activities that have any element of misleading or deceptive conduct are unlawful.  But, as with so many legal lines, there can be a little ambiguity.  And for small business owners, such ambiguity can present certain challenges.  If you’re planning a promotional campaign with a little flair, how can you tell if your creativity has gone too far?  The best way is to get a professional opinion.  But before you do, there are some signs that can guide you.  So let’s have a closer look at the law surrounding misleading and deceptive conduct.

Misleading or Deceptive Conduct: Where Does the Law Draw the Line?

Australian Consumer Law is the source of laws regulating misleading and deceptive conduct.  It’s designed to protect consumers against dishonesty.  It aims to do so by ensuring that consumers are presented with accurate and reliable information regarding goods and services.  The law prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive.

If we break that down, we can get a feel for what the law is attempting to achieve.  Firstly, it is limited to trade or commerce.  That means those fishermen’s tales your uncle tells are safe for now! Secondly, it applies to ‘a person.’  But in this context, that includes corporations and individuals.  And thirdly, it prohibits conduct that is misleading or deceptive.  It doesn’t stop there, though.  Australian Consumer Law also prohibits conduct that is likely to mislead or deceive.  So that narrows the scope of permissible conduct a little.  To understand more, let’s consider the definitions.

Misleading Conduct: Here’s How to Pick it

Australian Consumer Law has maintained a deliberately broad view of what is misleading or deceptive, under sections 18 and 29.  That means most cases of misleading or deceptive conduct are determined by the court, which considers all the surrounding circumstances of a transaction.  The definition of misleading is to be an objective one, too.  That means it is a question of fact.  So, what is to be considered in assessing whether conduct is misleading?  Generally, a court will consider whether the relevant conduct induced, or was capable of inducing error.  Did the purchaser think he or she was getting a different product at the time of transaction?  If so, was that a result of the vendor’s conduct?  In each case, the law will look a little deeper than those questions alone permit.  However, they’re useful questions to ask when you’re developing your own marketing campaign.

False Representations: When do they Become Misleading?

We see false representations all the time; they’re on TV, in newspaper ads, and on billboards.  Some might show cars driving themselves, following their owners.  Others might show talking animals or other similarly impossible things.  They’re all designed to entice us to products.  However, they’re not misleading under the law.  Why is that?  Well, it’s pretty simple: they’re not designed to induce us into buying a car that we think will follow us around.  They’re simply examples of creative marketing campaigns, which are designed to get us thinking a certain way or making positive associations between feelings and products.  A promotion will become misleading when it is designed, or even has the effect of inducing a reasonable person into buying something that is presented as having qualities that it doesn’t have.

Misleading the Public vs Misleading the Person: A Legal Distinction

Australian Consumer Law has an unsurprising focus on the consumer.  A lot of consumer law principles are directed at the protection of individuals, against misleading commercial conduct.  However, consumer law expresses further provisions to protect the public more broadly.  Those can be found in sections 33 and 34.  Under sections 33 and 34 of Australian Consumer Law, conduct likely to mislead the public is prohibited.  So how does that differ from sections 18 and 29, for example?  Well, they all share a lot of similarities.  Ultimately, they share similar intentions as well.  However, sections 33 and 34 don’t have the same transactional focus.  Their perspective is more of a broad one.

The earlier sections have a primary focus on consumers, specifically, people who are misled into making a purchase.  The later sections, on the other hand, are designed to prevent companies from fostering an inaccurate image seeded in public deceit.  In doing so, the provisions intend to foster a better commercial environment for consumers more broadly.  That is illustrated, for example, by the section 33 prohibition of conduct that misleads the public in relation to the manufacturing process of goods.  In that example, the law prevents companies from claiming social credibility for their ‘environmentally friendly,’ or ‘fair trade’ manufacturing, without proper basis.  In doing so, it gives consumers a greater peace of mind in relation to the provenance of their goods.

Keep the Energy but not the Embellishment: Some Tips for Proper Promotion

Advertising, marketing, and promotion all require a creative edge to help you get ahead.  After all, their purpose is to make you stand out.  But honesty is of even greater importance.  In every promotion your business undertakes, there’s a balance to be struck.  Get some help walking the tightrope of proper promotion.  Contact me.  I understand consumer law, but more importantly, I understand business.  Better still, I know how the two can co-exist for everyone’s benefit.