In April 2019, The Australian Competition and Consumer Commission (ACCC) instituted legal proceedings in the Federal Court against iSelect Ltd (iSelect) for misleading and deceptive conduct.
The ACCC alleges that iSelect prioritised companies on their ‘Preferred Partner Program’ over other companies on their website. iSelect would display to consumers more energy plans from these companies on their ‘Preferred Partner Program’ who were paying a higher commission to iSelect.
In doing so, iSelect was providing less representation of companies which were not part of this program and which may have had more affordable energy plans available to consumers. In doing so, it is alleged that iSelect misled consumers by failing to provide the ‘impartial and objective’ comparison of energy plans that consumers believed they were receiving.
The proceedings commenced by the ACCC sought to address this allegedly misleading conduct by seeking orders requiring iSelect to cease the relevant conduct and pay pecuniary penalties for their failure to comply with the Australian Consumer Law (ACL). Given the potential ramifications of misleading and deceptive conduct, it is important that consumers and business owners alike are able to identify prospective misleading conduct before problems such as this arise.
What is Misleading and Deceptive Conduct?
Under section 18 of the ACL, persons involved in trade or commerce are prohibited from engaging in conduct that is misleading or deceptive. This includes a prohibition of conduct that is likely to mislead or deceive. Importantly, there is no requirement that the misleading conduct be intentional, or that anyone suffer any loss or damage as a result of the conduct.
Claims of misleading and deceptive conduct can be made by the ACCC or by anyone to whom the misleading conduct was directed – though in the latter case, this would be unlikely to occur unless some loss or damage had been suffered.
What can be classified as misleading and deceptive conduct?
Misleading conduct is not limited to written statements made in advertising material. It extends to oral and visual representations that are misleading, and also extends to representations made by silence.
For example, if a retailer stated that a customer could return a couch within a month and the customer, upon attempting to do so, is informed that this is only applicable where there is a manufacturing fault with the couch, then the retailer has engaged in misleading conduct.
Similarly, if the consumer had advised that they intended to return the couch if it did not suit their house and the retailer remained silent as to the terms regarding returning the couch, then the retailer has engaged in misleading conduct.
A further essential element of misleading and deceptive conduct under the ACL is that it must occur in trade or commerce. Private representations made outside of trade or commerce do not fall within this conduct.
How to avoid misleading conduct
Given the wide range of conduct that is capable of falling within the purview of this section of the ACL, it is difficult to provide hard and fast rules for avoiding misleading conduct.
An essential element to keep in mind is the audience. Whether or not conduct is misleading depends on the person or persons to whom it is directed. A different standard is likely to be applied for representations made to a specific person than those made to a much wider audience.
As such, it is important to always keep in mind the impression that your conduct may give to your audience. As a preventative measure, offering context to all parties involved at the time of making any representation can be helpful as it ensures that all people involved are under the same understanding. This may be done by ensuring that the consumer is advised of all relevant terms and conditions, or simply by ensuring the wording or impression given by your conduct conveys the appropriate message. Where you are concerned that a misleading representation may have been made, it is best to clarify this with your audience, if this is at all possible.
It is also important to be careful when making representations regarding the quality of work or products. While some exaggerations may be simple puffery, the use of specific terms that provides a certain impression to consumers should be carefully used.
For example, in 2013, the ACCC took action regarding both written and visual statements made by a duck meat producer that described their products as open range, even though the ducks were raised solely in an indoor shed. The Federal Court found that these statements were misleading and ordered that the producer pay $375,000.00 for penalties and costs. Similarly, terms such as ‘top-quality’ or relevant industry-specific terms should be used carefully and in accordance with commonly understood definitions.
How can Sharrock Pitman Legal assist?
If you require advice on misleading and deceptive conduct, please feel free to contact Simon Matters on (03) 8561 3324. As Accredited Commercial Litigation Specialists, we are able to provide you with advice regarding your options, whether it be as a consumer or a business owner.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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Simon is a Senior Associate of Sharrock Pitman Legal.
He is an Accredited Commercial Litigation Specialist (accredited by the Law Institute of Victoria) and deals with Litigation, Mediation of Disputes, and Law for Charities & Not for Profits. For further information, contact Simon Matters on his direct line (03) 8561 3324.