It is not uncommon for consumers to be misled or deceived by a business given that a business will often attempt to make their goods or services sound more appealing to its consumers. Fortunately, section 18 of the Australian Consumer Law (ACL) imposes a prohibition on businesses from engaging in misleading or deceptive conduct.
Section 18 of the ACL
The ACL is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Section 18 of the ACL provides:
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.
A party seeking a cause of action under section 18 must therefore establish that the relevant conduct occurred in trade or commerce and that the conduct was misleading or deceptive or likely to mislead or deceive.
What does “in trade or commerce” mean?
The High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 has interpreted this to mean conduct that is of itself trading or commercial in nature. This interpretation established that section 18 will apply to anyone who provides goods or services to others or any professional activities or transactions that have a trading or commercial character.
Therefore, while section 18 is frequently used for conduct involving, or directed towards, consumers, it can also be invoked in purely commercial transactions. In particular:
- It can be used by businesses to protect their commercial interests.
- It can be used in respect of private conduct as well as conduct directed towards the public.
- It can be used by individuals in relation to commercial transactions as well as in relation to consumer transactions.
What are examples of conduct that is misleading or deceptive or likely to mislead or deceive?
On one hand, conduct that is misleading conveys a meaning that is inconsistent with the truth and does not need an element of fraud or intent. On the other hand, conduct that is deceptive involves a conscious intention to trick or mislead another person.
However, section 18 not only prohibits conduct that actually misleads or deceives, but also conduct which is merely likely to do so. As such, it is not necessary to prove that anyone was actually led into error, it is sufficient if the conduct was likely to have this effect.
Some common forms of conduct that may be misleading or deceptive or, likely to be include:
- Promotions or advertisements that include false or inaccurate information about goods or services.
- Small print in advertisements that is not prominent, being enough to result in consumers developing the wrong impression of what the advert offers.
- Offering rebates, gifts, prizes or other free items without intending to provide them as offered.
- False promises or representations about the future, for example a statement that shares in a company will triple in value within two years or that goods will meet industry standards.
- Accepting payment for goods or services when intending not to supply them.
- Using a true statement to give a false and misleading impression.
- Silence or non-disclosure of important information that is likely to mislead the consumer into error.
It is important to note that what is misleading or deceptive conduct is decided case by case. The courts will use an objective test, having regard to all the surrounding circumstances to determine whether conduct is misleading or deceptive.
Disclaimer
The information contained on this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.
Accordingly, the information on this site is provided with the understanding that the authors and publishers are not providing legal advice. As such, it should not be used as a substitute for consultation with professional legal advisers. Before making any decision or taking any action, you should consult with a professional lawyer from Rouse Lawyers.
Liability Limited by a scheme approved under Professional Standards Legislation.