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Recent Trends in Misleading and Decep2ve Conduct Cases
Katrina Groshinski, Partner Minter Ellison Lawyers
3 October 2014
1. Misleading or deceptive conduct – overview of the law
2. Golden rules & common misconceptions
3. Recent trends – ‘absolute’ terms and fine print
4. Questions?
Overview
• Australian Securities and Investments Commission Act 2001 • General prohibition in relation to financial
services – Section 12DA • Specific prohibition relating to misleading the
public – Section 12DF • Other prohibitions on bait advertising,
pyramid selling, offering gifts, rebates etc • Corporations Act - Section 1041H • Very similar to prohibition on misleading
or deceptive conduct in section 18 of the Australian Consumer Law
• Applies to all promotions in all media
The law
• Enforced by ASIC • Fines $1.7m / $340k per breach (or
per set of breaches of a similar nature around the same time)
• Other remedies include adverse advertising orders
• Private parties can also sue – usually seeking injunctions (ie to prevent further publication) and/or damages
• ….not to mention reputational damage and business disruption
The consequences
• When will an advertisement be likely to ‘mislead or deceive’?
• ‘Tendency to lead into error’ on the facts of each case - ie: – real (i.e. not remote) chance or possibility – that an ordinary and reasonable person – in the audience to whom the statement was
directed – would be led into error – by the ‘overall impression’ conveyed
• Context is therefore extremely relevant
General principles
• Additional rules against specific false or misleading representations
• Includes (for example): • Particular standard, quality, value, grade • A particular person has agreed to acquire
services • Sponsorship, approvals, performance
characteristics, uses or benefits • There need for the services • The price • Testimonials
• Focus on general misleading conduct prohibition as breach ‘threshold’
Specific rules
• Who is the relevant ‘audience’? • Cannot presume any ‘special knowledge’ about
financial services or credit
• What is a ‘reasonable person’? • Range of class from astute to inexperienced • Practical rule of thumb: unsophisticated and
uninformed consumer
• What is the ‘overall impression’ conveyed? • For advertising (‘unbidden intrusions’), the overall
impression is often determined by the dominant impression
General principles
Common misconcep?ons
• We didn’t say anything… – Decep?on may result from silence or omission – OBen what you leave out
• It’s OK because its literally true – It’s the overall impression that maEers – can be
misleading even where statements are literally true
Common misconcep?ons
Common misconcep?ons
• It’s OK to make predic@ons / promises about the future – Must have a reasonable basis – Presumed not to have reasonable grounds
unless you produce evidence to contrary
Common misconcep?ons
• But that’s what it means in the industry – A ‘general’ audience will nor be
presumed to have special knowledge about your business’ products or services
– For example, this means can’t presume familiarity with common terms and condi@ons etc if promo targets new customers
But its in the fine print! Beware disclaimers
• Only have limited applica?on • Ineffec?ve if dominant impression is misleading
• Can only be used to further explain a condi?on – not contradict
• Sufficiently prominent to distract aEen?on
• The audience pool
• Broadcast – no special knowledge
• A ‘reasonable person’ in that audience • Unsophisticated and inattentive
• Fine print will rarely create an accurate ‘overall impression’ where the ‘dominant impression’ is misleading on its own • Consider:
• Relative prominence: size, location, duration • Content: clarify, not contradict • Context: don’t let the visual let you down
Prac?cal lessons for use of fine print in adver?sing
• Size: how big? • Actively distract audience attention
• Duration: how long? • Long enough to be read…carefully • Industry guidelines are no defence
• Location: where? • Same medium as the message it relates to (eg
voiceover claim needs voiceover clarification) • Subsequent disclosures rarely adequate: online eg
each screen / banner must stand alone without requiring further information (dominant impression)
• Consider appropriateness of the medium for the message
• Example: iiNet, TPG, Jetstar
1. Rela?ve prominence
…and in a web context?
ACCC v Jetstar, Virgin – proceedings issued 19 June 2014 Graphic: Australian Business Traveller www.abt.com.au
…even where prominent on landing page
ACCC v Jetstar, Virgin – proceedings issued 19 June 2014 Graphic: Australian Business Traveller www.abt.com.au
ASIC fines NAB • NAB’s subsidiary Ubank ran a series of ads adver?sing “The Best $2014 ever” and “Own $2014” indica?ng that customers that took out a home loan would receive $2014
• Qualifica?ons were set out in very fine print: • Minimum $350,000 loan • Need to use FASTRefi seElement process • Cap on number of customers that can take up the offer
• ASIC issued an infringement no?ce – NAB paid
ASIC fines SuperHelp • SuperHelp put out an ad in the AFR’s Smart
Investor Magazine • The ad made claims, highlighted in red, about
SuperHelp’s SMSF accoun?ng and administra?on services.
• However, fund setup was only free if half the admin fee was paid up front, and pension setup was only free for people over 60.
• ASIC issued an infringement no?ce even though the ad said ‘condi?ons apply’
• SuperHelp paid
• Can only be used to further explain a condition – not contradict the expectation raised by the ad itself
• Avoid absolute language that requires qualification
• Examples: Coles ‘Fresh’; bet365 (claim)
2. Content
The ACCC’s view on what would not be misleading
Offer must ‘clearly and prominently state, in type the same size and colour as and in close proximity to the words ‘free’ or ‘bonus’ or equivalent word, the existence if any condi@ons to the following effect which may apply to that offer:
(i) That the offer is not available for bets at odds less than [x]; (ii) That any ‘free bets’ or ‘deposit bonus’ and/or any winnings from
any ‘free bets’ or ‘deposit bonus’ are forfeited unless the customer complies with certain other condi@ons within a certain @meframe;
(iii) That the value of the ‘free bets’ is limited by the size of the customer’s first deposit;
(iv) That residents of Victoria, New South Wales, South Australia and Western Australia are not eligible for the offer.
• Consider the impression created by both your graphics, voiceover/text, logos, brand…
• Example: Optus
3. Context
Reframing the compliance ques?on • Don’t ask: what is the message that an
attentive, intelligent person would draw upon a diligent examination of all elements of this communication?
• Ask: what is the dominant grab that an inattentive, unsophisticated person with no special knowledge about our products, would take from this communication?
• Be more creative at the outset – clear claims that don’t require qualification, in appropriate mediums
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