What is Misleading and Deceptive Conduct under the Australian Consumer Law?

The Australian Consumer Law forms Schedule 2 to the Competition and Consumer Act 2010. Section 18 of the Australian Consumer Law discusses misleading and deceptive conduct. Specifically section 18(1) states that:

  • A person must not, in trade or commerce, engage in conduct that is misleading or

deceptive or is likely to mislead or deceive.

This covers a lot of things. We usually see it in our area of work in combination with claims of trade mark infringement or passing off. The theory here being that if a person is infringing a trade mark, then they may also be misleading or deceiving consumers through the use of the infringing mark. Trade mark infringement is described within the Trade Marks Act 1995 (Cth). It allows a trade mark owner to take action against another legal person. A core difference is that the Australian Consumer Law is there to protect consumers from a businesses’ conduct.

So in short, when we look at trademark infringement or passing off, that’s protecting the business, the brand owner or person with a reputation.  Whereas the Australian Consumer Law is there to protect the consumer from being misled or deceived by a business. That can happen in a lot of different ways, but where we see it or where it’s applicable to trademark is the idea being that by using somebody’s trademark without permission, you are misleading or likely to mislead the consumer into believing that you’re associated with or affiliated with the trademark owner when you’re not, so the business is falling foul of that consumer protection law.

In our line of work  we see it often in trademark infringement disputes, particularly in letters of demand. We’ve all done it in such letters to ensure a client’s basis’ are completely covered. In such a letter it would not be unusual to see a trademark infringement allegation, an allegation of misleading and deceptive conduct under the Australian Consumer Law and possibly also a passing off claim the one letter. This is because they all come back to the same principle, that one person is using something like a brand or a logo or something like that that they shouldn’t be using because it’s too similar to one that either somebody has registered as a trademark or that they have a reputation in such that passing off applies or that they are going to mislead consumers through the use of that because consumers will assume it’s used by the trademark owner when it’s not.

You may also see this when sending a letter (or receiving one) where the alleged ‘owner’ of a brand doesn’t have a trade mark registered, so as an unregistered owner they might rely on the misleading conduct provisions of the Consumer Law as the basis for their letter. We of course recommend trade mark registration rather than relying on these consumer law provisions. It can be far easier to enforce rights in a registered trade mark (which requires no reputation attached in order to enforce your registered rights) than relying on unregistered rights.

Who enforces Consumer Law in Australia?

As mentioned above, the Consumer Law is there to protect the consumer. That’s governed by the ACCC along with all the things that the ACCC do to protect consumers in Australia. Misleading and deceptive conduct is just piece of the Competition and Consumer Act overall. The ACCC and the legislation cover a lot of things that are unfair to consumers. This could include price fixing (where competitors get together to fix prices of competing goods/services, so they all get top dollar and consumers don’t have an affordable lower cost option) or abusing your position as a big company when setting contracts with consumers. They govern anything and everything basically that involves protecting consumers from any sort of unfair treatment or behaviour of a business. They make the rules around refunds – what your obligations are and what the consumers’ rights are.

Examples of Misleading and Deceptive Conduct

Outside of how this may come into play in a trademark infringement claim, there are many ways a business could mislead or deceive (or be likely to mislead and deceive) a consumer that would amount to a breach of section 18 of the Australian Consumer Law.

Let’s say you were on the hunt for a specialist to help you set up pay per click advertising within the Google® internet search engine. You come across a business’s website, that attaches to a domain such as “googleadcampaigns.com.au” and once you’re there, there’s a shiny badge to tell you the business is an Official Google PPC Partner or similar. Then, you find out that business has no affiliation with, endorsement or sponsorship from Google. That’s entirely misleading conduct in Australia, as the business has not only used the Google trade mark – but, they’ve made it out that they are an official partner when they’re not.

Take away message

As a business, it is your responsibility to ensure you are not engaging in any sort of unlawful conduct in the operation of your business. This includes ensuring you’re not infringing other party rights in intellectual property, but also ensuring you are not engage in conduct that could mislead or deceive a consumer in any way.

Check your website content/copy – make sure you’re not saying something that will leave a customer assuming something that’s not true. In online businesses this seems to come a bit in terms of refund policies. Make sure your policies are in line with the law – your policy cannot put a consumer in a worse position than the law provides!

Do not think fine (unreadable) print protects you. Using the connection to trade mark law as an example, a teeny tiny disclaimer or message that the average person won’t find or be able to read won’t escape infringement, nor is it likely to escape a finding that you’ve engaged in misleading or deceptive conduct.

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