It is illegal for a business to make statements that are incorrect or likely to create a false impression. This applies to advertisements or statements in any media (print, radio, television, social media and online) or on product packaging, and any statements made by a person representing your business.
For example, your business must not make false or misleading claims about the quality, value, price, age or benefits of goods or services, or any associated guarantee or warranty. Using false testimonials is also illegal.
Using false reviews or testimonials is also illegal. Reviews should only be written by people who have actually experienced your products or services and reflect the consumer's genuinely held opinion.
When assessing whether conduct is likely to mislead or deceive, consider whether the overall impression created by the conduct is false or inaccurate.
It does not matter whether a false or misleading statement was intentional or not.
The ACCC alleged that Amaysim Australia Ltd and Lycamobile Pty Ltd each separately misrepresented that their mobile phone plans were ‘unlimited’ in advertisements on social media designed to entice new customers, when in fact the plans had a maximum data allowance.
The ACCC issued an infringement notice to each company for alleged false or misleading representations about their mobile phone plans. Amaysim paid $126,000 and Lycamobile paid $12,600 in penalties.
Read more in the Amaysim and Lycamobile ACCC media release
Misleading statements don't need to be in writing
Verbal statements can also be misleading. Images and videos can be misleading too.
Verbal claims can be false or misleading even if they are contradicted or clarified in writing (e.g. in a contract).
Silence can be misleading
In some circumstances, failure to disclose information can be misleading. This is particularly the case if you provide some information but don't mention important details that qualify the information provided.
Example: John wants to purchase premises for a particular purpose and he tells this to the vendor. The vendor knows the premises aren't suitable for John's purpose, but remains silent. The vendor's silence could amount to misleading conduct.
Relaying information can amount to misleading conduct
When a business passes on information it receives from a third party, it can still be in breach of the law if that information is misleading or deceptive – unless the business makes it clear that it is just relaying the information and isn't giving any assurance about its accuracy.
Example: A real estate agent, relying on information provided by the vendor, told the purchaser that the land could be redeveloped. This wasn't true. The agent is guilty of misleading or deceptive conduct even though he believed the information was correct. It is irrelevant that the purchaser could easily have discovered the error by making enquiries with the council.