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What are false or misleading representations?
It is unlawful to make false or misleading representations about goods and services when supplying, offering to supply or promoting those goods or services.
For instance, a business must not make false or misleading representations about:
- the standard, quality, value or grade of goods or services
- the composition style, model or history of goods
- whether the goods are new
- a particular person agreeing to acquire goods or services
- testimonials by any person relating to goods or services
- the sponsorship, approval, performance characteristics, accessories, benefits and uses of goods or services
- the price of goods or services
- the availability of repair facilities or spare parts
- the place of origin of a product - for example, where it was made or assembled. For more information, view our Country of origin claims page
- a buyer's need for the goods or services
- any guarantee, warranty or condition on the goods or services. For more information, view our Guarantees, warranties and refunds section.
Courts have found false and misleading representations in these cases a:
- manufacturer sold socks, which were not pure cotton, labelled as ‘pure cotton’
- retailer placed a label on garments showing a sale price and a higher, crossed-out price. However, the garments had never sold for the higher price
- business made a series of untrue representations about the therapeutic benefits of negative ion mats it sold
- motor repairer told a customer more repair work was needed on their car than was necessary.
Whether a representation is considered false or misleading will depend on the circumstances of each case, and what misleads one group of consumers may not necessarily mislead others.
People concerned about their body image may be more vulnerable to products claiming to enhance beauty. Whether a representation about a beauty product was misleading would depend on whether it might mislead a reasonable person within this group.
A representation can be misleading even if it is partly true.
On the front of its product packaging, a business claimed its batteries lasted as long as those of two other competitors. The claim was supported by tests, but only against some (not all) of the competitors’ batteries. This was explained on the back of the packaging. A court found the message on the front of the packaging had misled consumers, even though there was a clearer message on the back of the packaging.
Testimonials - also known as reviews - are statements from customers about their experience with a product or service. Businesses often use them as promotional marketing tools.
It is unlawful to make, rely on or use false or misleading testimonials.
Testimonials can appear:
- on a business’ website
- on independent review websites or forums
- in marketing emails
- in newspapers.
Businesses which commonly rely on testimonials include:
- alternative health care businesses
- weight loss service providers
- estate agents.
Genuine customer reviews and testimonials increase consumer confidence and can provide valuable independent information about a product or service.
False testimonials may persuade consumers to make the wrong choices. Examples of false and misleading representations about testimonials include:
A business published a newspaper advertisement about a ‘nasal delivery system’ to treat impotence or erectile dysfunction. The advertisement quoted an interview with a celebrity that falsely claimed he had suffered from impotence and the nasal delivery system had assisted in dealing with this condition.
An advertisement where an actor is portrayed as a real person and falsely claims to have reaped financial benefits from distributing health care products.
Tips for businesses
- make sure any testimonials you use are true and correct
- don’t post or publish misleading reviews
- omitting negative reviews can be as misleading as posting false positive reviews
- be transparent about commercial relationships with anyone providing a testimonial
- keep records of all customer reviews and testimonials. Courts may consider testimonials to be misleading unless you can prove otherwise.
When shopping online, be wary of:
- review websites that appear to be associated with a product or business
- reviews that criticise a specific product while promoting a competitor’s product
- the same review appearing multiple times or under different names
- reviews with discount codes or information about where consumers can purchase goods or services
- email addresses with three or more numbers at the end - this may mean an automated program has created the review
- testimonials that sound like press releases or advertisements, or have industry specific words that consumers are unlikely to use
- websites that only display a few reviews that are all positive, or a large amount of reviews that are either very positive or negative (for example, rating one or five stars out of five).
Sale or grant of an interest in land
A business must not make false or misleading representations about the sale or grant of an interest in land.
A business must not:
- represent it has a sponsorship, approval or affiliation when it does not
- make false or misleading representations about the:
- nature of the interest in the land
- price, location, characteristics or use that can be made of the land
- availability of facilities associated with the land.
A real estate agent would be misrepresenting the characteristics of a property if advertising ‘beachfront lots’ that do not front the beach.
Employment and business activities
It is unlawful to make false or misleading representations about the:
- availability, nature or terms and conditions of employment (or any other matter relating to the employment)
- profitability, risk or other material aspect of any business activity that requires work or investment by a person.
A second-hand truck dealer falsely told buyers they could get employment from certain places if they bought the dealer’s trucks. The truck dealer was found to have misled the buyers.
Misleading conduct as to the nature of goods and services
A business must not engage in conduct likely to mislead the public about the:
- manufacturing process
- suitability for purpose, or
of any goods or services.
An importer sells bicycle helmets with labels indicating the helmets meet a mandatory safety standard, even though the helmets have not been laboratory tested to check whether they meet the standard.
When stocks of organic eggs ran out, a supplier packed eggs in a carton labelled as ‘organic’ even though the eggs were not.
Exceptions for information providers
‘Information providers’ include media organisations such as:
- radio stations
- television stations
- publishers of newspapers or magazines (including online).
Information providers are exempt from liability for false or misleading representations.
However, this exemption does not apply to:
- conduct or representations about employment matters
- supply of goods or services by the information provider
- publication of advertisements.
Publishing an advertisement
Information providers and other businesses may not be responsible for publishing a false or misleading advertisement if they can prove that they:
- are in the business of publishing or arranging for the publication of advertisements
- received the advertisement for publication in the ordinary course of this business, and
- did not know, and had no reason to suspect, that the advertisement was false or misleading.
Making false or misleading representations is an offence.
The maximum criminal penalty is $220,000 for an individual and $1.1 million for a body corporate. Civil penalties for the same amount apply. Other civil remedies include:
- compensatory orders
- orders for non-party consumers
- non-punitive orders
- adverse publicity
- disqualification orders.
Before taking enforcement action, consumer protection agencies can:
- require a business to provide information that will support claims or representations made about goods or services
- accept court-enforceable undertakings
- issue public warning notices.