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False and misleading conduct weighs down small businesses

False and misleading conduct weighs down small business

False and misleading conduct was the chief issue for small businesses in the last six months of 2019, the ACCC has reported.

The watchdog received a total of 900 reports by small businesses about false and misleading conduct by other businesses including suppliers in the six months to 31 December, representing an increase of 8 per cent.

This issue continues to be the Australian Consumer Law issue most commonly affecting small businesses, and accounts for over a third of small business reports made to the ACCC, according to the latest Small Business in Focus Report, published on Monday.

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“We are concerned about the increase in reports from small businesses about false and misleading conduct, and remind businesses they must ensure their representations to both consumers and business counterparts are accurate and honest,” ACCC deputy chair Mick Keogh said.

The ACCC confirmed it will take action when it becomes aware of misleading and deceptive conduct, especially when that conduct has the potential to result in widespread harm.

“A recent example was our investigation into concerns that Coles Group may not have fully passed on to Norco a milk price rise, as it claimed it would in its marketing materials. As a result of ACCC action, Coles committed to paying Norco dairy farmers around $5.25 million,” Mr Keogh said.

Problems in franchising persist

Franchisors not acting in good faith towards franchisees continues to be the most commonly reported misconduct under the Franchising Code.

Another common problem was inadequate disclosure, which accounted for 14 per cent of franchising reports, and was a key issue of the ACCC’s targeted compliance checks in the café, takeaway and restaurant sector in 2019.

“We are continuing our work to educate franchisees that franchising, like other businesses, involves risks, and to remind franchisors of their obligations,” Mr Keogh said.

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“We’ve developed resources including a guide to help franchisees understand their disclosure document, and a guide for franchisors about what a disclosure document should look like.”

Scammers scam businesses out of millions

The ACCC also disclosed that between 1 July and 31 December 2019, its Scamwatch website received 2,021 scam reports from Australian small businesses with $1.4 million losses. If medium-sized enterprises are included, the number of lodged reports climbs to 2,530, while losses hit $2.4 million.

The reports indicate that while some scams target businesses, small businesses are also experiencing the same scams that affect many consumers.

However, the ACCC pointed out that robocall scams, remote access scams, phishing scams and fake charity scams have the potential to have a greater impact on small businesses than the ordinary consumer.

Australian businesses are encouraged to visit www.scamwatch.gov.au to learn more about scams targeting them and how to protect themselves.

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has an extensive career as a journalist across finance, business and market intelligence. Prior to joining Momentum Media, Maja spent several years unravelling social, political and economic intricacies in Eastern Europe. 

You can email Maja on This email address is being protected from spambots. You need JavaScript enabled to view it. 

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False and misleading conduct weighs down small businesses
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