Avoid misleading customers about products or services

You can't hide the important facts about goods or services in the fine print.

A disclaimer is a statement that lets consumers know what to expect from a product or service and may include information about the limits of a seller’s legal liability. Any disclaimers must:

• be prominent and visible
• not be obscured by images, graphics or text
• not undermine or contradict the original proposition.

For example, a gym membership advertises a weekly fee, but doesn't include additional admin fees.

A promise, opinion or prediction about a product or service can be misleading or deceptive if you:

• know it's false
• don’t care if it's true or not
• have no reasonable grounds for making it.

For example:

• a real estate agent says if you buy in this area it will double in price in the next 12 months
• a water tank salesperson states a 1,000L tank will meet your water needs for 6 months
• a transport company gives the impression it takes freight by air, but it actually sends it by road.

You must not keep silent about important facts relating to your goods or services. You must give consumers enough information to make an informed choice.

For example:

• a mobile phone seller offers free weekend calls, but doesn't stress that the offer excludes calls to other networks
• a store advertises a sale as '25% off everything', but excludes certain items from the sale
• a business advertises reduced rates to entice customers, but only some items are actually available at that rate
• a real estate agent advertises a property for less than the minimum price provided by the seller.

Courts will look at the details of each case to decide if silence was deceptive conduct.

If you offer gifts, rebates or prizes, you must actually provide them. They must match their advertised description. False competitions are illegal.

For example, a stereo business holds a promotion where customers who buy a stereo go into a draw to win prizes. The retailer adds fake names to the draw and declares these as the winners, so no prizes are ever awarded.

You must keep a reasonable supply of sale items you advertise. If you sell out, you can't talk customers into buying something similar that’s a higher price or lower quality.

For example, an electronics business advertises a television for $799 in a week-long sale. The business would usually sell about 30 televisions of this type each week. In this bait advertising example, the business only stocks 2 of the advertised televisions and refuses to take customer orders. When customers try to buy the advertised television, they're told it’s out of stock and offered a more expensive television for $999.

Businesses often advertise that a product or service was originally available at a certain price but is now on sale for a lower price. They might compare their:

• current price and previous price
• retail price and 'cost' or wholesale price
• price and a competitor's price
• price and the recommended retail price (RRP).

This is known as 'was/now pricing', 'two-price advertising' or 'strike through pricing'.

If your business offers comparative pricing, you must ensure that consumers aren't misled about the savings they will get.

For example, advertising a product as 'was $100, now $50' or '$100 $50' is misleading if the product wasn't sold at $100 for a reasonable period directly before the sale started.

It can also be misleading if only a small number of previous sales were at the higher price directly before the sale began.

Manufacturers can offer cash back when they're trying to increase sales or pass on discounts. Businesses that use 'cash back offers' must ensure consumers aren't misled about the benefits.

For example, advertising cash back when actually issuing a gift card is misleading or deceptive conduct.

It's also illegal to offer rebates, gifts or prizes without intending to supply them, or not providing them as offered.

Other misleading conduct includes:

• promoting the after-cash-back price as the main price instead of the actual price
• not clearly outlining all conditions at the time of purchase.

If you're offering cash back promotions, we recommend you make sure the consumer is aware of all conditions they must meet to receive the offer before they buy.

For example, a business promotes a $3 cash back offer on the outside of a 500g packet of biscuits. After buying the biscuits, the customer sees the conditions inside the pack, which reveal the cash back is only available if they can provide 3 barcodes from other items in the range of products, excluding the 500g packet of biscuits.

You must never accept payment from a customer if you:

• don't intend to give them the goods or services
• know you can't offer the goods or services in a reasonable time or in the time specified.

For example, a trader takes payment for installing solar panels when they know stock is not available.