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Regulators fail to define ‘misleading claims’

Adam Zuchetti
Adam Zuchetti
01 August 2017 1 minute readShare
Businessman in shackles

Businesses are being shackled amid legal ambiguity around consumer law, Australia’s competition watchdog has confirmed, with no official definition in place on what constitutes a ‘misleading claim’.

My Business sought to clarify the situation around what constitutes false and misleading advertising, and the penalties that can be handed down to businesses, after readers accused regulators of playing ‘semantics’ on their interpretation of the law.

A spokesperson for the Australian Competition and Consumer Commission (ACCC) has since confirmed to My Business that “there is no definition of a misleading claim in the Australian Consumer Law”.

“Generally speaking, the courts have determined that conduct is misleading when it is capable of leading people into error. The overall impression given by the conduct or a particular claim will be considered in determining whether it is misleading,” the spokesperson said.

“Any statement a business uses to represent its products or services should be true, accurate and able to be substantiated. There are fines for businesses that mislead consumers. It does not matter whether a false or misleading statement [is] intentional or not.”

In the 2016-17 financial year, nine businesses paid infringement notices issued by the ACCC, the spokesperson said. However, the number of businesses falling into the trap of making misleading claims is likely to be much higher, given that not all firms pay issued infringement notices, and some are prosecuted – and that is just the ones actively pursued by the ACCC.

Meanwhile, others have been rebuked by separate regulators such as ASIC, which successfully prosecuted a managed investments company for making misleading statements about its investment projects.

Information listed on the ACCC website states that infringement notices for misleading or false information currently sit at $2,100 for individuals and $10,500 for corporations.

Despite the lack of definitive legal parameters, business owners are encouraged to familiarise themselves with the ACCC’s Advertising and Selling Guide as a means of remaining compliant with the law.

The guide also includes details of what options are available should the ACCC issue you with an infringement notice.

Regulators fail to define ‘misleading claims’
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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