Other promotional techniques
Social media and moderation
Social media refers to any internet based application that facilitates the exchange of user-generated content. Social media gives both consumers and businesses a direct way to interact with each other. A person can provide feedback, respond to articles, post images and generate other forms of content on websites.
There are no specific or different consumer laws in place for social media. The laws which prohibit businesses from making false, misleading or deceptive claims about their products or services apply to social media in the same way they apply to any other marketing channel. Don’t make statements on your Facebook page or on other social media that you wouldn’t make in any other type of advertising.
Related information: Social media
Example: XYZ Pty Ltd tweets that they are the first Australian company to offer a 100 per cent environmentally friendly car wash service when they have not done any research to support this. It turns out that GHI Pty Ltd has offered the same service for many years. This tweet is likely to be false, misleading or deceptive.
Businesses using social media channels like Facebook, Twitter and YouTube have a responsibility to ensure content on their page is accurate, irrespective of who put it there. You can be held responsible for posts or public comments made by others on your social media pages which are false or likely to mislead or deceive consumers.
The risks posed by social media are best dealt with through a clear and prominent moderation policy on your business’ homepage. A policy provides contributors with expectations around when their posts may be moderated.
In relation to Facebook for example, businesses and 'community managers' should refrain from removing all critical comments about the business posted on their Facebook page. As an open, two-way forum, there is an expectation that page moderators will only remove comments where necessary; for example offensive, unlawful or clearly untrue material.
To protect themselves, businesses that use social media should display their moderation policy prominently so that consumers have a clear understanding of when and why content will be moderated, whether that be through editing or by removing them.
Real case study: In 2011, a court found that a company accepted responsibility for fan posts and testimonials on its social media pages when it knew about them and decided not to remove them.
Case law: Federal Court of Australia -  FCA 74
Media release: Firm fined for testimonials by Facebook 'fans' and tweeters
Example: LMN Pty Ltd and DEF Pty Ltd are market leaders in the paint industry. A customer posts on LMN’s Facebook page that their paint always lasts much longer than DEF’s paint. LMN is unsure if this is true, but decides not to remove the post. It turns out that LMN’s paint does not last longer. LMN may be held responsible for this misleading claim.
Monitor your social media pages and remove any posts that are false, misleading or deceptive as soon as you become aware of them. The amount of time you need to spend monitoring your social media pages depends on two key factors: the size of your company and the number of fans or followers you have. Keep in mind that social media operates 24 hours a day, seven days a week, and many consumers use social media outside normal business hours and on weekends.
Example: OPQ Pty Ltd has 300 staff. As larger companies usually have sufficient resources and sophisticated systems, the ACCC would expect OPQ to become aware of false, misleading or deceptive posts on its Facebook page soon after they are posted and to act promptly to remove them.
Example: XYZ Pty Ltd has only 10 staff but more than 50 000 Facebook fans. Given the number of people who could be misled by an incorrect post on XYZ’s Facebook page, the ACCC would expect XYZ to devote adequate resources to monitoring its Facebook page and to remove false, misleading or deceptive posts soon after they are posted.
You can respond to comments instead of removing them, but where the comment is false, it is possible that your response may not be sufficient to override the false impression made by the original comment. It may be safer to simply remove it.
You should offer a refund to any customer who made the decision to purchase your product or service based on a false, misleading or deceptive claim they saw on your social media page.
Reviews and testimonials
Reviews and testimonials are popular tools used by businesses to promote their goods and services, particularly online, and can be a useful way for consumers to decide if a good or service is right for them.
Reviews and testimonials are often used in several ways:
- businesses use reviews and testimonials on their own websites or through other promotional material (for example, in a brochure or television advertisement)
- review websites (also known as review ‘platforms’) allow consumers to leave reviews and ratings about businesses to help other consumers differentiate between a range of similar goods or services
- reviews or opinions can be posted using social media, blogs, comment threads, and other channels of communication.
Regardless of the advertising medium, any review or testimonial should reflect the genuine views and opinions of the person that is represented to have made it. Businesses must not misrepresent consumer opinions to dishonestly promote themselves. A fake review or testimonial is one which does not reflect the genuinely held opinion of the author. Using false or misleading reviews or testimonials in any advertising medium will risk contravening the ACL.
Example: XYZ.com.au sells vacuum cleaners online. It wants to display testimonials on its website attesting to the quality of the product, but it doesn’t have many existing customer reviews to use. XYZ.com.au decides to create a few positive testimonials to post on its website and pretends they have been written by different customers.
This is misleading or deceptive conduct because the reviews are not genuine customer reviews.
Real case study: One solar panel company published written testimonials on its website and another published video testimonials on YouTube that were not made by genuine customers of the companies. The Federal Court ordered payment of penalties of $125 000, for publishing fake testimonials and also for making false or misleading representations about the country of origin of the solar panels they supplied.
Businesses may be engaging in misleading or deceptive conduct if they:
- use fake reviews, including as a form of false advertising or to damage the reputation of a competitor
- use tactics to influence a consumer to provide a positive review or refrain from a negative review
- selectively remove or edit reviews, particularly negative reviews, for commercial or promotional reasons.
Businesses should check reviews and testimonials carefully and implement good record keeping practices to ensure they are able to show that reviews and testimonials are honest and accurate.
Online review platforms
Online reviews are increasingly being relied upon by consumers as a low cost means of making more informed purchasing decisions. Online reviews can cover both online businesses and traditional bricks and mortar businesses.
As noted above, review websites which allow consumers to leave reviews and ratings about businesses are also known as review ‘platforms’. Review platforms generally publish reviews on their own site. Sometimes review platforms are engaged to collect and publish reviews on another’s site.
Just as for other advertising mediums, fake online reviews are in breach of the ACL. Businesses or review platforms must not post or publish misleading reviews. Businesses must not write or commission reviews about their own business or a competitor’s business which are misleading.
It should also be remembered that omitting negative reviews can be just as misleading as posting fake reviews. Businesses seeking to avoid the risk of misleading consumers should also not engage a review platform to selectively remove or edit negative reviews.
Example: WXY.com.au is a marketing firm that, for a fee, offers to improve the ranking of businesses on review websites. WXY.com.au creates some fake positive reviews and posts them on review websites, securing a more favourable rating for the paying business.
The marketing firm’s conduct would breach the ACL because it has misrepresented the reviews to be genuine consumer feedback. The paying business may also have breached the ACL by being involved in the marketing firm’s conduct.
Real case study: A removalist created a review website, www.movingreview.com.au, and used fake testimonials posed as genuine consumer testimonials - fake positive testimonials about its own services and fake negative testimonials about the services of its competitors. The removalist also wrote fake testimonials posed as genuine consumer testimonials on third party review websites.
The removalist paid a $6600 infringement notice and provided a court enforceable undertaking.
Related s.87B undertaking: 2011 ss. 18, 29(1)(f) & 29(1)(e) undertaking
Media release: ACCC: Removalist admits publishing false testimonials
Related information: Managing online reviews
Related publication: Online reviews – a guide for business and review platforms
Qualifications and exclusionary clauses
Businesses sometimes qualify claims or include exclusionary clauses in their advertisements. When using these clauses, businesses should ensure that the limitations they place are legal.
Whether or not something misleads an audience depends on the overall impression created. The exclusions should be considered together with the main offer and what is contained in the headline. The customer is not required to exhaustively search for qualifications and exclusions. The advertiser must clearly direct the consumer’s attention to the most significant terms and conditions so that they can make an informed judgment about whether to make a purchase.
Example: A national department store runs a series of advertisements in newspapers and on television about a sale. The television advertisements prominently state that discounts will apply to all clothing. Another series of television advertisements states that discounts will apply to all homewares. In fine print both ads exclude certain brands of clothing and homewares. Related newspaper advertisements do not make any reference to the exclusion of certain brands. A failure to clearly specify the exclusions is likely to mislead customers and therefore breach the ACL.
Offers with disclaimers and fine print
It is common to see advertisements with limitations or disclaimers using an asterisk (*), ‘conditions apply’ or other requirements to limit the audience’s expectations. Fine print is often used in advertisements, contracts, labelling and signs.
These qualifications usually appear close to the lead selling point. If an asterisk appears near the word ‘free’, for example, a business may be trying to trade on positive reactions to the selling point, while trying to keep within the law by putting the conditions in the fine print. This may not protect that business from breaching the ACL.
The main selling point used for a product or service may make such a strong impression that no disclaimer can dispel it. An advertiser must not make the real terms and conditions of the offer unclear or unreadable by:
- placing text in obscure locations
- using text that is too small
- flashing disclaimers on screen for only a moment
- using voice overs that are too quick or too quiet.
The type and context of the advertisement is relevant as well. For example, it will be harder to ensure that small print conveys the real terms of the offer on a billboard on a highway that cars pass at 100 kilometres per hour, as compared to small print in a newspaper advertisement.
Example: A gardening service offers a special lawn mowing deal – after four paid services, the fifth lawn mowing is half-price. The offer is made through a series of radio advertising segments. At the end of the ad, there is a quick mention that ‘terms and conditions apply’ without going into further detail. The terms and conditions are in fact quite onerous, requiring the customer to live in a two kilometre radius of the business, be a pensioner and it applies only to lawn mowing on Monday mornings. The failure to clarify or explain important elements of the offer is likely to mislead customers and therefore breach the ACL.
Claims about the future
A business that makes a claim about future matters (including predictions or projections) must have reasonable grounds for doing so at the time of making the claims. If it does not then the business can be guilty of misleading or deceptive conduct.
It is the responsibility of the business that made the claim to show that it had reasonable grounds to make the statement. It is important that you consider, or adequately address, the range of uncertainties and variables involved when making claims about the future.
Example: A real estate agent claims that a golf course will be developed in the area within the next year as a major selling point to the properties sold. The agent continues to make these claims despite knowing there are no plans to develop a golf course. The agent is misleading potential purchasers by suggesting there are such plans when the agent has no reasonable grounds to do so.
Asserting right to payment and unsolicited supplies
‘Unsolicited supplies’ are goods or services supplied to someone who has not requested them. Under the ACL it is illegal to request payment for goods or services that the consumer has not agreed to buy.
You must not issue an invoice that states an amount to be paid for unsolicited goods or services unless you reasonably believe you have a right to be paid or the invoice contains a prominent warning including the text ‘This is not a bill. You are not required to pay money’. In a dispute, if you are demanding payment, you must prove your legitimate right.
Some businesses may try to place consumers (or other businesses) in a position where they will either:
- inadvertently pay for unsolicited goods or services
- pay for them as a way out of an unpleasant situation.
Such conduct may constitute a contravention of the ACL.
Example: A customer goes to a hairdresser for a haircut and blow dry and is quoted $70. While washing her hair the hairdresser gives her a conditioning treatment that she did not ask for. She is later charged $100 for the haircut—$70 for the cut and blow dry, plus an extra $30 for the conditioning treatment. This is a contravention by the hairdresser to which a pecuniary penalty applies and the customer is not legally required to pay the additional $30.