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Traders Beware

May 30, 2016

We all know the adverts that promise the world, only to find that buried in tiny print at the bottom or at the end, there’s a “BUT”. Even worse, there are the advertisements or offers that are blatantly misleading, if not dishonest. Then there are advertisements that require you to opt out of a service that is also provided, that you may not want and may not even have noticed is being offered. These examples are by no means exhaustive.

Suppliers of goods or services need to ensure that they don’t fall foul of the law when advertising their wares. They also need to ensure that any terms relating to the sale of their goods or services comply with the law. Traders can be fined and the Commerce Commission is on the prowl. Damage to reputation isn't easy to repair.

The need for care is even more important when dealing with "consumers" (as defined in the Consumer Guarantees Act and the Fair Trading Act).

One of the worst examples recently of misleading advertising was the sale of tablets for pain relief in Australia, where a well known company marketed its product in such a way as to suggest that there were different types of the product specifically targeted at different types of pain. In all cases, the product was exactly the same - there was only one product. But consumers would have thought that they were buying products designed to target specific types of pain.

Then there’s the typical offer of goods or services where buried somewhere in the advertisement or offer, there’s a qualification that detracts from the offer. “It’s only $100” and then somewhere in obscurity, there's a qualification that says that the offer applies only to the first customer or only if the goods or services are acquired on a Sunday between midnight and 1.00am or only if you come from Pluto.

A recent example of the “opt out” dilemma related to an airline where if you made an online booking, you would be lumped with an add on unless you opted out of the service. The add on was pre-selected for you. I can't recall if there was any message that you could del-select or whether it was left entirely up to you to figure out that you that add-ons were being dumped on to you. The Commerce Commission has reached an agreement with the airline whereby the airline has agreed to abandon that practice.

A recent example of misleading conduct in relation to the instore sale of goods concerns a leading retailer in Australia where a sales representative in one of its stores told consumers that the store had no obligation to provide a remedy in relation to defective goods sold by the store. This was a clear breach of the Australian equivalent of our Consumer Guarantees Act. It was inexcusable because the retailer knew or should have known the legal position and because it should have ensured that its staff knew as well.

If you are a supplier of goods or services, be honest and be upfront. Also be informed. - know what the law requires. Don’t skimp on getting legal advice because the cost of getting things wrong are likely to considerably outweigh the cost of getting legal advice. There’s also the risk of reputational damage. If you’re not an honest trader, then you won’t care.


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