Businesses making false or misleading claims – avoid misleading and deceptive conduct

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The Australian Competition & Consumer Commission (ACCC) is an independent Commonwealth statutory authority whose role is to enforce the Competition and Consumer Act 2010 and ensure compliance with competition, fair trading and protecting consumers against any conduct that misleads or deceives or is likely to mislead or deceive consumers or other businesses. This includes making false or misleading claims.

This applies even if there was no intention to mislead or deceive anyone or no loss or damage was suffered because of the conduct.

The ACCC state on its website:

“It is important to look at how the behaviour of the business affects the audience’s impression of a good or service. When deciding if conduct is misleading or deceptive, or likely to mislead or deceive, the most important question to ask is whether the overall impression created by your conduct is false or inaccurate.

While a business is not required to disclose information in all circumstances, there will be situations where a business must provide information to avoid engaging in misleading or deceptive conduct. You should disclose additional information to your customer or another business where it is likely that your other conduct has created a misleading impression, or where it is reasonable to expect that this information will be disclosed”

Most importantly the ACCC emphasises that when presenting information about products or services to consumers and customers you must:

  • give current and correct information
  • use simple language
  • check that the overall impression is accurate
  • back up claims with facts and documented evidence where appropriate
  • note important limitations or exemptions
  • correct any misunderstandings
  • be prepared to substantiate.

You should not:

  • guess the facts
  • omit relevant information
  • make ambiguous or contradictory statements or use unnecessary jargon
  • make promises you cannot keep, or make predictions without reasonable basis
  • offer goods or services without a reasonable basis for believing you can deliver them.

A good example of when the ACCC will act was in relation to well known active wear brand, Lorna Jane Pty Ltd (Lorna Jane). The ACCC launched a Federal Court action against Lorna Jane alleging its “Anti-virus Activewear” claims were in breach of Australian Consumer Law.

The ACCC action also alleged that Lorna Jane director and CEO Lorna Jane Clarkson, was knowingly concerned in the alleged conduct.

The activewear treated with a product branded LJ Shield was launched in July and heralded by the company as either eliminating or stopping the spread of COVID-19 and other contagious pathogens. It also stated that the claims were based on scientific testing.

The ACCC is seeking declarations, penalties, injunctions, corrective notices and an order for Lorna Jane to implement a compliance program.

Interestingly it shows that it is not only the company that can be held to account but also its officers. 

The ACCC cannot:

  • act on an individual’s behalf or provide them with legal advice on their rights and obligations under the law
  • make formal decisions on whether a person or business has breached the law
  • provide dispute resolution services between consumers and businesses.

Want to know more about misleading claims and deceptive conduct?

Our team of lawyers has extensive experience in both prosecuting and defending both consumers and businesses in relation to consumer disputes.

If you are accused of a breach or believe you have been a victim of misleading claims, contact our team for a consultation today.

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