"The Australian Competition and Consumer Commission is cracking down on advertisements that use fine print to qualify the message", ACCC Chairman, Professor Allan Fels, warned today.
"For example, this week beginning tonight Target is required to broadcast advertisements on 88 television stations and many major newspapers throughout Australia explaining to consumers how its advertisements breached the Trade Practices Act by using fine print which misled consumers."
"This is the first time the Federal Court has ordered a business to broadcast corrective advertisements on television for a breach of the misleading and deceptive conduct provisions of the Trade Practices Act" said Professor Fels. "Previously the ACCC has obtained corrective television advertisements in a product safety matter involving Hungry Jack's*.
"The Commission is concerned about the misleading nature of fine print in advertising in catalogues, print media, point of sale material and television", said Professor Fels. "Consumers can easily be misled by big bold promises that don't adequately reveal important qualifications. In such cases, consumers will be unfairly enticed into the shop, potentially not getting what they expected or costing them money and time.
"The obligation on Target to broadcast a national television corrective advertisement on television and publish notices in newspapers across metropolitan, regional and rural Australia follows a Perth Federal Court order." In his order Justice Malcolm Lee declared a number of Target newspaper and television advertisements, which appeared nationally last year, were false, misleading and deceptive. The orders were made with Target's consent following ACCC court action. Target has also chosen to apologise to consumers for the campaign.
The ACCC is currently taking similar action against Medibank Private Limited, Medical Benefits Fund of Australia Limited, and Quality Bakers Australia Limited (Buttercup). The ACCC has also obtained court orders against Goldy Motors Pty Ltd and has resolved matters administratively involving American Express and Pocket Money Ltd**.
"In taking action the Commission seeks accurate advertisements, so that they provide consumers with useful and reliable information and therefore enhance competition. "Advertisements that use fine print to qualify the message, will be subject to greater scrutiny and action by the Australian Competition and Consumer Commission," ACCC Chairman Professor Allan Fels announced today.
"If consumers come across advertisements, which they regard as seriously misleading or likely to mislead by use of qualifying statements or fine print, they can lodge complaints with the ACCC by calling 1300 302 502 between 8.30am - 6.00pm (Eastern Standard Time)", Professor Fels said.
Target's advertising stated in large print that substantial percentage price reductions applied to a broad category of goods. But the advertisements also used small print to exclude several items from the discount. Target now accepts that the use of fine print exclusions failed to correct the overall impression and failed to adequately inform consumers that restrictions applied.
For example, Target advertised 25 to 40 per cent off "every stitch of clothing" but, in small print, excluded underwear, socks, hosiery and other items it classified as accessories. In similar style television advertisements, Target also advertised 15 to 40 per cent off housewares and again used small print to exclude manchester (eg: towels, sheets, pillow cases) from the sale. Related newspaper advertisements failed to include any reference to the exclusion applying to manchester goods.
At the time, Target had in place a 'raincheck' policy***. This policy promised to notify in advertisements when rainchecks were not available on specific items. Contrary to this policy Target's television advertisements failed to advise consumers that rainchecks were not available for the discount sales.
Justice Lee also:
- issued injunctions restraining Target from advertising in the same way for four years (Target is at risk of contempt of court should it breach the injunction)
- ordered Target to review its trade practices compliance program
- ordered Target to pay ACCC costs of $65,000.
Professor Fels noted that Target, in its newspaper notices, will unreservedly withdraw its allegations, made in a media release of 6 September 2000, that the ACCC had adopted a 'sue now talk later' approach in commencing its legal proceedings against Target and any suggestion that the legal proceedings were inappropriate. The ACCC first warned Target about 6 weeks before taking legal action about its concerns in this matter.
Legal proceedings were finally instituted on 5 September 2000 when the discussions could not achieve a substantive resolution. Professor Fels acknowledged that since the Federal Court case against Target was launched last year, Coles Myer has cooperated in addressing ACCC concerns about use of fine print and qualifications in advertising by other companies in the Coles Myer Group.
It will also work with the ACCC to ensure that there is a broad improvement in the standard of advertising dealing with fine print and qualifying statements for the ultimate benefit of consumers. "Through its 'Advertising and Selling' Guidelines for industry, the Commission has warned for many years of the need to exercise great care in advertising if businesses use qualifying statements or fine print", said Professor Allan Fels.
"The Guidelines were prepared in consultation with Federation of Australian Broadcasters (FARB), Australian Association of National Advertisers (AANA), Federation of Australian Commercial Television Stations (FACTS), Australian Publishers Bureau (APB).
"Despite widespread promotion of the guidelines through the advertising industry, the level of attention to these important matters is not adequate. Sometimes advertisers are tempted to use fine print to avoid giving a qualified main message. This is unfair to competitors who advertise lawfully, costing them business.
"If a business needs to qualify its advertisements it must make sure that the qualifying statements are clear and prominent so that consumers know what the real offer is. This is especially important on television where an advertisement may only run for 15 seconds. In that time consumers simply don't have time to focus on the detail of offers especially where the qualifying statements are screened briefly and appear in fine print.
Also, the 'voice-over' should clearly state any qualifications."