What is the Misleading and Deceptive Conduct Law in Australia?

September 15, 2023    litigation lawyers
What is the Misleading and Deceptive Conduct Law in Australia?

The Australian Consumer Law aims to protect customers from unethical business practices. It is uniformly applicable all over the nation, and non-compliance leads to legal troubles. Under this law, Section 18 makes misleading and deceptive conduct illegal in the field of trade and commerce. Scroll through this article to discover crucial details about the misleading and deceptive conduct law in Australia and its legal implications.

Understanding the Concept of Misleading and Deceptive Conduct

Misleading and deceptive conduct revolves around businesses making inaccurate, misleading, or deceptive claims about their offerings. The legal provision that puts a ban on misleading and deceptive conduct contains the critical phrase “likely to mislead or deceive.” Therefore, misleading and deceptive conduct is not just illegal when businesses do it intentionally.

The “intention” to mislead or deceive consumers is not given importance here. Maybe a business is highlighting information that it believes is true, but, in reality, it is false. Even in that case, consumers can hold businesses liable for violating the provisions of Section 18 under the Australian Consumer Law.

Usually, deception requires malicious intent and involves a guilty mind. However, misleading behavior does not always involve an intent. Therefore, even unintentional misleading conduct is punishable under Australian law.

What Is Considered to Be Misleading or Deceptive Conduct?

Once you approach a commercial litigation lawyer, they will tell you that misleading and deceptive conduct can entail different types of activities. Some of the most prominent forms of misleading or deceptive behaviors in trade and commerce are as follows:

  1. Bait Advertising: Sometimes, businesses advertise their products at a specific price. But, they might not have adequate stock to supply the product at that price. For instance, businesses promote products at a slashed price without sufficient inventory.
  2. False Advertising: Making false claims about the benefits, usefulness, and characteristics of a product also qualifies as misleading or deceptive. For instance, a moisturizer claims to be acne-prone when it is not.
  3. Leaving Out Crucial Information: Businesses hiding critical information about their products or services is a serious offense. For instance, concealing the fact that a motorbike has been involved in an accident previously.
  4. False Guarantees and Warranties: Businesses advertising false guarantees, warranties, or other after-sale services is another violation.
  5. Unfair Contracts: Any contract favoring the business and misleading or deceiving the consumer in any way is also considered illegal under this section.
  6. Pyramid Schemes: Misleading or deceiving consumers about potential earnings from certain opportunities is also illegal.
  7. Exaggeration of Business Activities: Misleading and deceptive conduct can extend beyond the products and services of a company. It often involves businesses claiming to be holding certain certifications or maintaining specific quality standards when they are not.

Evaluation of Misleading and Deceptive Conduct in the Court

The law of misleading and deceptive conduct is pretty complex. Therefore, a thorough inspection is necessary before giving the verdict. In a court of law, several factors are taken into consideration to determine whether a behavior was misleading or deceptive for an individual or specific group of consumers. The different factors taken into consideration are as follows:

Context: The court begins with inspecting the circumstances or background of the conduct. The type of goods and services and the impacted consumers are also taken into consideration. Understanding the context also involves checking the manner of the conduct and whether any disclaimers or statements were used to mislead or deceive consumers.

Silence: The court will try to determine whether it was silence or hidden information that led to the breaching of the provisions under section 18.

Opinions and Future Predictions: Any predictions or opinions about the future can also be misleading or deceptive. No business should share undisclosed, unfounded, or unreasonable assumptions about their offerings.

Audience: Before declaring conduct as misleading or deceiving, the court will consider the plausible reaction of a reasonable or ordinary member of the impacted audience. Moreover, the characteristics of different groups of target audiences need to be considered. Remember that something that is misleading or deceiving to one segment of the audience might not be the same for others.

The court will always rely on evidence like customer testimonials, market research, and expert reports before declaring certain conduct as misleading or deceptive. But it does not have to be proved that a business or individual was misled or deceived. Any conduct that could be potentially deceiving or misleading will also attract relevant legal implications.

Legal Consequences for Misleading and Deceptive Conduct

The legal consequences for misleading and deceptive conduct in Australia are as follows:

  • Monetary Fines: The court often imposes a fine on businesses, and the amount varies according to their nature. For instance, the fine is $1.7 million for corporations.
  • Non-Punitive Orders: Non-punitive orders like injunctions require businesses to stop their misleading or deceptive behaviors. Non-punitive implications can also include corrective advertising orders. In this case, businesses need to correct the false information that it was giving out to consumers.
  • Infringement Notices: Infringement notices are also issued for breaching the provisions of the misleading and deceptive conduct law. In the case of corporations, the penalty is up to $16,500. On the other hand, individuals have to pay up to $3300 for a single infringement.
  • Disqualification: At times, individuals involved in misleading or deceptive behaviors are disqualified from managing corporations for a certain period.
  • Compensations: In case another individual or business has suffered damages or loss due to misleading or deceptive conduct, they become entitled to claim compensation.
  • Compliance Order: At times, the court orders businesses to set up a compliance program to prevent misleading and deceptive conduct in the future.

Conclusion

The best litigation lawyers in Perth are equipped to handle all types of misleading and deceptive conduct cases. These experienced and dedicated professionals evaluate different aspects of the legal scenario to help clients navigate past the intricacies of Australian Consumer Law. In the end, experienced and professional litigation lawyers will help resolve all the serious repercussions surfacing from misleading and deceptive conduct.

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