May 6, 2014

Australian Consumer Law & Advertising Practices: The Dominant Message – Get it right or risk being fined

On 12 December 2013, the High Court by a 4 – 1 majority, sent a clear message to advertisers to be careful in ensuring that the dominant message of their advertising and marketing is not misleading and deceptive.  Advertisers can no longer rely on the fine print of an advertisement to avoid liability under the Australian Consumer Law (ACL), where the dominant message of an advertisement is otherwise misleading or deceptive.

The decision offers greater protection to consumers who are targeted by bold and attractive advertising and clarifies the extent of advertisers’ obligations under the ACL. 

ACCC v TPG

In Australian Competition and Consumer Commission v TPG Internet Pty Ltd,1 the High Court reinstated a $2 million pecuniary penalty imposed on TPG for a misleading advertising campaign about TPG’s unlimited broadband bundle.

In its $8.9 million advertising campaign, TPG ran this headline: “Unlimited ADSL2+ for $29.99 per month”.  However, the price in the headline was only available for consumers who bundled the broadband service with a home phone service for a total of $59.99 per month.  The pricing condition, including set up charges and the minimum length of the contract, were less prominently displayed than the headline advertising and appeared in the fine print of the advertisement.

At first instance, the trial judge found that the advertisements were misleading and deceptive and contravened sections 18 and 29 of the ACL, and that the total price of the service contravened section 48 of the ACL.

On appeal to the Full Federal Court, the Full Court overturned the trail judge’s finding and held that the advertisement was not misleading or deceptive.

On appeal to the High Court, the High Court held that the Full Court erred in its finding and reinstated the trial judge’s finding that the advertisement was misleading and deceptive in contravention of the ACL.  Critical to the High Court’s finding was the ‘dominant message’ test in determining whether an advertisement is misleading and deceptive.

The High Court found that the dominant message of TPG’s advertising had the ‘unremarkable consequence’ that a consumer might only absorb the general thrust or ‘dominant message’ of the advertisement and would not pay particular attention or have regard to the smaller fine print and details. The effect of this was that it caused consumers to contact TPG rather than one of its competitors on the basis of an “erroneous belief engendered by the general thrust of TPG’s message”.  Accordingly the High Court reinstated the $2 million pecuniary penalty imposed by the trial judge.

Implications of ACCC v TPG

Advertisers must be mindful of the ‘dominant message’ test in assessing whether their advertisements may be considered misleading or deceptive.

When advertising pricing information it is important to state an all inclusive price and ensure that any pricing conditions are clearly and prominently advertised.

Rouse Lawyers can assist you and your business in assessing and ensuring that your advertising complies with the ACL and is not misleading or deceptive.

Footnotes
1.[2013] HCA 54.