The Federal Court has declared that television and in-branch advertising by the Commonwealth Bank of Australia for one of its home loan campaigns misled consumers.
The Cricket Home Loan Campaign ran from 22 November 2001 to 27 January 2002 as part of the bank's "no regrets" themed advertising. The advertisements claimed in bold headlines that "no establishment fee" was payable for a home loan.
In fact, customers had to either already hold or obtain two or three additional bank products to take up the offer of "no establishment fee".
The court ruled that the advertisements were misleading and deceptive in breach of Section 52 of the Trade Practices Act 1974 as they did not make clear that customers had to either hold or obtain these additional products to avoid an establishment fee.
The court also found breaches of:
- Section 53(c), which prohibits misrepresentations as to the benefit of services;
- Section 53(e), which prohibits misrepresentations as to price; and
- Section 53(g), which prohibits misrepresentations concerning the exclusion of any condition;
The court ordered injunctions and corrective advertising.
Justice Conti commented on: "the importance of the obligation of television advertisers to be careful not to misstate, in the course of televised advertising, the benefits and advantages of their goods and services" and noted the "pre-eminence and impact of the unqualified 'no establishment fee' message" and its "capacity to entice or induce [viewers] into the Bank's marketing web".
The decision made it clear that the words "terms and conditions apply" cannot override a false representation that is bold in its initial assertion.
Justice Conti said: "It is just that the same or similar expressions [terms and conditions apply] would normally be ineffective to qualify or set at nought the implications and consequences of the misrepresentations made".
ACCC Chairman, Mr Graeme Samuel, said the decision indicated that the words "conditions apply" cannot be used as a catch-all to conceal important information.
"The expression should be used with extra care and regard given to spelling out important qualifiers in the main message", he said. "Advertisers cannot make bold promises and then use the fine print to avoid honouring them".
Justice Conti concluded that: "Both the scope and the legibility of those texts and captions of the televised and in-branch advertisements were such as to constitute no effective qualification upon, much less defence to, the otherwise misleading nature and effect of the 'no establishment fee' representation".
Mr Samuel said the decision sends a warning to all businesses tempted to hide the true nature of their offers behind the words "conditions apply".
"Advertisers need to tell the whole story. They need to be upfront about important conditions. If they make an offer to the world they need to be sure the whole world really can take up that offer".
Mr Samuel also said the action was a good example of regulators working together to protect the public. In March 2002, the Australian Securities and Investments Commission assumed responsibility for consumer protection issues in relation to credit contracts, including mortgages. Accordingly, ASIC was joined as an additional applicant to protect consumers in the future.