If you are operating a small business, navigating your way through the Australian Consumer Law can be a confusing and complicated task.
While most small business operators possess many wonderful skills, deciphering the law may not be one of them, and having a lawyer on hand to help interpret and understand the law just isn’t a reality. That’s why this Guide by ACCC, explaining the Australian Consumer Law in simple terms, is such a helpful resource.
The Australian Consumer Law governs advertising and selling practices among Australian businesses. It gives consumers important rights, warranties and protections.
It is important that businesses understand their obligations under the Australian Consumer Law.
Remember, businesses that sell products or services online, are still subject to Australian Consumer Law.
Here are a few areas that the Australian Consumer Law regulates regarding the sale and advertising of goods and services.
Misleading or deceptive conduct
Under the Australian Consumer Law, it is illegal for businesses to:-
- Engage in conduct that is likely to mislead or deceive consumers; or
- Make False or misleading statements.
Fake reviews or testimonials
One form of false, misleading and deceptive conduct is creating fake positive reviews of products or services. Reviews and testimonials can powerfully influence a consumer’s decision to purchase a product or service, and they must be genuine.
Similarly, you cannot post fake negative reviews about your competitors. Likewise, your competitors must not post fake negative reviews about your business, products or service. Not only is this unethical business practice, but it is also illegal unless your competitors have had a direct experience that validates the negative review.
The ACCC gives the example of a new online business selling vacuum cleaners. The business doesn’t yet have any existing positive reviews, so it creates a number of fake reviews confirming the quality of it’s products. This would be classed as misleading and deceptive conduct.
Advertising, selling and promotional techniques
Extra care should be taken when engaging in some forms of advertising, selling and promotional techniques, such as:-
- Bait advertising. This practice can be illegal if goods are not available in reasonable quantities and for a reasonable period at the sale price;
- Social media, reviews and testimonials. Care should be taken to ensure that these advertising methods are honest and open. Particularly, social media activity, testimonials and reviews should not be false, deceptive or misleading. For businesses with a large online presence, it is vital to implement a social media policy and moderation policy;
- Certain claims require extra care, such as health claims, animal welfare claims, environmental and organic claims, country and place of origin claims.
The Australian Consumer Law specifies a range of pricing obligations. These include:
- Businesses must state/display the total price payable, including all taxes, duties, levies or other fees or charges (with the exception of restaurant/café surcharges in some situations);
- If more than one price is displayed for an item, be it attached to the goods, published online, in a catalogue, brochure, poster, flyer, etc, then the business must either sell the goods for the lowest displayed price or withdraw the goods from sale until the price is corrected;
- Sale prices or price comparisons with the businesses own previous pricing (for example, was $100 now $50) should be used honestly and with care and should not be misleading or deceptive;
- Mandatory unit pricing for grocery retailers.
The Australian Consumer Law gives consumers a number of guarantees in respect of goods and services purchased.
The guarantees that apply to the sale of goods, include:
- That the goods are of acceptable quality: they are safe, durable and free from defects;
- The goods are fit for any purpose specified by the consumer or supplier;
- The goods match the package or label description.
The guarantees that apply to the sale of services, include:
- The services will be provided with due care and skill;
- The services will be fit for any purpose specified by the consumer;
- The services will be provided within a reasonable time, where no time has been otherwise agreed.
For more detailed information on these topics and others covered by the Australian Consumer Law, download the ACCC’s Advertising and Selling Guide, here.
To download your advertising and selling guide, click here.