Avoiding misleading or false claims

When it comes to your advertising, don’t let your small business get caught out making false or misleading claims. The Australian Competition and Consumer Commission (ACCC) has recently exercised its power to enforce on false advertising laws. Read here to learn why you should avoid misleading and false claims in business. The ACCC has issued penalties to businesses unable to substantiate their claims about their products or services.

The ACCC generally defines a claim to be false or misleading (and consequently in violation of false advertising laws and regulations) when the statement is inaccurate or likely to create a false impression, regardless of whether the business intended to deceive consumers or not. For example, a business that claims certain health benefits their product or service offers but has no substantial evidence to back up this statement. Four areas where small businesses may find their claims to be misleading or false include:

Environment ‘green’ claims

Businesses displaying statements about their products in relation to the environment, i.e., not tested on animals, environmentally sustainable, environmentally safe or fully recycled, need to be able to appropriately substantiate these claims. For example, some claims can be considered vague if a business describes their products as ‘natural’, ‘biodegradable’ or ‘pure and plant-based’.

Comparative advertising

Tread carefully when using comparative advertising to promote your product or service. A business that releases statements comparing their product or service to a competitor’s, i.e., in relation to price, volume, range or quality, must ensure they have made a fair and valid comparison of the products. Comparative advertising can be tricky, for instance, should you decide to compare on price, the competitor only has to go ahead and alter the cost of their product and your advertisement may then be considered misleading or incorrect.

Fine print and qualifications

Businesses need to ensure that the overall message of the advertisement does not refute any information included in the fine print attached to their product or service. If the product is advertised as organic but includes synthetic chemical preservatives in the ingredients list, then this is generally considered false or misleading advertisement.

Bait advertising

Bait advertising occurs when a business might advertise a sale on a product but not have enough stock available for customers to buy during the sale period, influencing them to purchase a more expensive item.

*** This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication date July 2018.

Business Matters Q3 2018 Cover | Issue Includes A Piece on Compliance with False Advertising Laws and much more

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