Misleading or deceptive conduct – considerations for business

4 min read

The false, misleading or deceptive conduct prohibitions that are enshrined in the Australia Consumer Law (ACL) – Schedule 1 to the Competition and Consumer Act 2010 (CCA) – apply to representations made to any person or business.1 Importantly, the ACL should not be dismissed due to its "consumer" title. The obligations that apply to any business, extend to whether it is communicating with the public as a whole, a subset of individuals or other businesses.

Representations made in trade or commerce must be truthful, represent the whole story, have a reasonable basis and not lead its recipient into error. A consumer of that information must not be misled or deceived, nor should the communication, or lack thereof, be likely to be mislead or deceive.

False, misleading or deceptive conduct

Making of a false statement or representation is quite clear – the information provided is factually incorrect. However, where a statement or representation is made and there are differing interpretations that can be taken from the information, or all relevant information has not been disclosed to enable the reader to make an informed view, this has the potential to lead the consumer of that information into error raising misleading or deceptive conduct concerns.

Points of exposure

Any means of communication made in trade or commerce falls for consideration under the false, misleading or deceptive conduct provisions of the ACL. These statements can be made broadly in advertisements, websites, marketing material, company statements, media releases, speeches, or at conferences. Alternatively, they can be made in operational documents, market predictions, financial projections, profit forecasts or representations as to diversity or ESG status.

The challenge that faces businesses in making statements is considering how each person within a targeted class of persons will interpret the information and whether they will be led into error as a result of the information. The representation made needs to be considered as a whole and in context. That is, if the representation is to the general public, the statement should be clear and unambiguous such that all potential consumers of that information will easily understand what is being communicated and have all information in their possession to make an informed decision. On the other hand, if the statement is directed to identifiable individuals, the content and context in which information is disclosed may be different where the recipient has special knowledge. No one size fits all approach applies to the application of the misleading and deceptive conduct, and the likelihood of engaging in misleading or deceptive conduct will turn on the circumstances surrounding the conduct.

As a business, what should I do? 

The key point to remember is that every communication made in the course of trade or commerce can be caught by the prohibition. Your intention in making the statement is irrelevant. Businesses must ensure that whether in business-to-business transactions or in preparing advertising, websites or even social media, to check for the following:

  • Accuracy – at the time of making the statement and revisiting this again for any future use.
  • Interpretation – how will the consumer of that information interpret the statement?
  • Clear – fine print, small font, disclaimers and use of footnotes should not "hide" key information.
  • Reasonable grounds for making the statement – can you substantiate the representations made?
  • All relevant information included – is there any further information required to complete the picture?
  • Method of communication – is the statement appropriate for the delivery vehicle?
  • Contentious statements – consider whether they really need to be included.

Having an internal compliance and review process in place will assist in minimising the risk of incorrect, misleading or deceptive information being released from your organisation.

Why should I worry? 

False, misleading or deceptive conduct is always in the sights of the regulator, whether that be the Australian Competition and Consumer Commission (ACCC), the State-based Fair Trading Offices, or the Australian Securities and Investment Commission. It is important to also note that your customers or competitors also have the ability to commence legal proceedings for a claim of misleading or deceptive conduct. 

Since the start of 2023, the ACCC and ASIC have bought or resolved approximately 10 misleading or deceptive conduct cases, the ACCC has proactively undertaken internet sweeps for greenwashing and reviewing industries of complaint, accepted court enforceable undertakings and both regulators resolve a large number of matters administratively. Although administrative resolution is an ideal outcome for any business, the investigation process can be lengthy, intrusive and are significant in terms of financial cost, time and business distraction in addition to the potential for penalties of up to $50 million.

What steps should I take now? 

Check your internal processes to ensure that you have the necessary checks and balances in place to ensure that any statements made are not called into question. At a time where we are seeing Australia making a significant shift in its energy transition, there is a focus on ESG, Australia has increasing levels of inflation and supply chains are recovering post-covid, be careful to make sure that your representations are accurate and can be substantiated, taking into account the changing economic environment.

1 The prohibition against misleading and deceptive conduct also subsists in the Australian Securities and Investment Commission Act 2001, the Corporations Act 2001, and various State-based legislation.

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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