If you think that the key to good marketing is to use words such as ‘free’, ‘lifetime’, ‘unlimited’ and ‘fresh’, take this as a warning to use these words carefully because they are high on the radar of the consumer regulator, the Australian Competition & Consumer Commission (ACCC).
In this article we list the top ten words that the ACCC and the Federal Court of Australia has penalised and sanctioned businesses for using in their advertising, marketing materials, packaging and on websites, because they are misleading.
The top ten weasel words are:
#1 Estate Fee
Funeral directors love euphemisms. They talk about the ‘dearly departed’ or ‘cherished person’, not ‘dead person’ or ‘corpse’. So it comes as no surprise that Alex Gow Funerals used ‘Estate Fee’ in its terms and conditions instead of ‘Late Payment Fee’.
The ACCC considered this to be an unfair contract term because it was unclear, particularly as the ‘Estate Fee’ (of $400) was included in every invoice. The ACCC penalised Alex Gow funerals $13,320.
Alex Gow refunded ‘Estate Fees’ paid in error and now calls it ‘Late Payment Fee’. ACCC Media Release
‘Free’ is one of the most powerful words used in advertising.
Phoenix Institute, a training college, offered students ‘free’ courses and ‘free’ laptops for enrolling.
The Federal Court found the use of ‘free’ to be false and misleading because by taking up the offer and enrolling in a course, students became liable to repay a HECS debt without actually taking the course. The Federal Court will impose penalties and corrective orders at a later date. They are likely to be large, taking into account that the fees funded by HECS and paid Phoenix for the enrolments were $109 million. ACCC Media Release
Bet365 offered “$200 FREE BETS FOR NEW CUSTOMERS” when in fact new customers were required to deposit and then gamble $200 of their own money first, before they could receive their $200 free bet. Also, they had to gamble their deposit and bonus three times before they could withdraw any winnings.
The Federal Court ordered Bet365 pay a penalty of $2.75 million. ACCC Media Release
#3 Pure ★ Natural ★ Organic
GAIA Skin Naturals advertised Natural Baby Bath & Body Wash, Baby Shampoo and Baby Moisturiser as ‘Pure ★ Natural ★ Organic’ when in fact they contained two synthetic chemical preservatives: sodium hydroxyl methyl glycinate and phenoxyethanol.
The ACCC considered the advertising to be false and misleading and penalised GAIA $37,800. ACCC Media Release
If a retailer advertises price reductions for all products, it will advertise ‘X% off storewide’. digiDirect advertised ‘15% OFF STOREWIDE’ in its sales promotions.
The ACCC considered the word ‘storewide’ to be misleading because a number of popular digital cameras, camera lenses and accessories were excluded from the promotions.
Although the promotions contained the disclaimer “terms and conditions apply”, the ACCC considered that this disclaimer was not effective to avoid it being misleading. The ACCC penalised digiDirect $39,240. ACCC Media Release
#5 Made in / Grown in
If a product is labelled ‘Made in Australia’ or ‘Product of Australia’, then by law it must be ‘substantially transformed’ in Australia by either being ‘grown’ or ‘produced’ in Australia. Or, as a result of one or more processes undertaken in Australia, the goods are ‘fundamentally different in identity, nature or essential character from all of their imported ingredients or components’.
Kimberly-Clark labelled flushable wipes ‘Made in Australia’ when they were imported from and made in Germany, South Korea and the UK. The ACCC prosecuted, and the Federal Court imposed a fine of $200,000 for false representations. ACCC Media Release
Ozwear marketed its ‘Classic Ugg’ footwear range as made using the ‘best materials available in Australia’ when in fact they were made in China. The ACCC penalised Ozwear $25,200. ACCC Media Release
On its website, Grape Co said that ‘Every single one of our grapes is personally hand-selected from the finest fruit on our family’s estate in Sunraysia Australia’, when in fact some of its grapes were grown on third party growers’ properties, not on the family farm. The ACCC said this was misleading and penalised Grape Co $34,920. ACCC Media Release
Four furniture retailers used statements such as ‘was $2599, now $2049’, or ‘$799, save $200’ in their advertising, when in fact the item had never been advertised at the ‘was’ price, or was only advertised at the ‘was’ price for a short period of time.
ACCC considered these claims of false savings misled consumers. The ACCC said that any claimed savings must be accurate and be based on a ‘before’ price which has been offered for a reasonable period when using comparison advertising. The ACCC penalised these retailers $12,600 each. ACCC Media Release
Outdoor Supacentre advertised ‘was/now’ price comparisons for products such as camp ovens despite not advertising or selling the products at the ‘was’ price for the previous three months. The ACCC penalised Outdoor Supacentre $63,000, and accepted an undertaking to cease and to publish corrective advertising. ACCC Media Release
Two mobile phone plan providers advertised ‘Unlimited Mobile Data offer’ when in fact the unlimited data allowance applied only for the first three renewals, and then reverted to a capped amount, with charges imposed if the data use by customers exceeded the capped amount.
The ACCC considered the advertising misled consumers because there was no clear and prominent disclosure of the limitations on data usage before additional fees were payable. The ACCC penalised Amaysim Australia $126,000 and Lycamobile $12,600. ACCC Media Release
Three of the largest GPS manufacturers in Australia used these statements in their advertising and marketing: ‘Lifetime TomTom Traffic’, ‘Lifetime FREE Maps’ and ‘Free Lifetime Maps & Traffic’, when in fact each retained the discretion to stop providing these services before the end of the lifetime of the device in certain circumstances.
The ACCC considered these limitations to be misleading because they were not communicated to consumers in a prominent way. At the ACCC’s request, the manufacturers agreed to amend the statements on all future advertising and marketing materials. ACCC Media Release
Belkin printed “lifetime warranty” or “limited lifetime warranty” on the packaging of its products (wireless routers, switches, cables), when it only repaired or replaced products within the five years from the date of purchase. Belkin had a disclaimer, but it was not printed on product packaging, only on its website. The disclaimer was not effective. Belkin undertook to the ACCC to honour claims made under its lifetime warranty policies for the lifetime of the original purchase. ACCC Media Release
Coles advertised bread as ‘Baked Today’ and ‘Freshly Baked In-Store’ when in fact it heated up in-store partially baked and frozen dough prepared off site by a supplier.
The Federal Court found these descriptions were misleading and ordered Coles to pay a penalty of $2.5 million. ACCC Media Release
It’s not so much the word ‘healthy’ but words which suggest nutrition and disease protection. As you will see, the penalties for breaches under this heading are substantial.
GJ Heinz advertised that its Little Kids Shredz products were ‘nutritious food’ for children aged 1-3 years’, when in fact they contained approximately two-thirds sugar which can cause health issues such as obesity and tooth decay.
The Federal Court found the nutrition claim to be false and misleading and ordered GJ Heinz to pay a penalty of $2.25 million. ACCC Media Release
Lorna Jane advertised that its activewear garments protected against viruses (including COVID-19) because they were treated with an ‘anti-virus’ spray, when in fact it did not have any scientific results to support that claim. The Federal Court ordered Lorna Jane to pay a penalty of $5 million. ACCC Media Release
The ACCC Advertising and Selling Guide (July 2021)
The Guide is ACCC’s comprehensive guide for businesses to refer to when advertising and promoting their goods and services.
The Guide provides examples of conduct that is likely to breach the Australian Consumer Law and practical tips for advertising and selling. It addresses marketing techniques and channels including:
- ‘was/now’ or ‘strike through’ pricing
- reviews and testimonials
- online group buying
It also provides guidance for businesses seeking to make claims on issues such as:
- environmental and organic merits
- country and place of origin
Don’t Trust the Marketing to the Marketers
My question is: Should the entire marketing function be left to the marketers, without input and oversight from other key business functions particularly legal compliance?
A cursory review of the ACCC media releases from the last five years reveals a catalogue of prosecutions where businesses have failed to obtain legal compliance input in their marketing and have felt the full force of the law as a result.
When a business engages in any form of marketing, they are making a promise to the customer. In most businesses, marketing messages are developed by the marketing team, often with little or no oversight from other business functions.
Marketing objectives are often defined as goals such as improve brand awareness, increase foot traffic or website visitors, or generate sales.
It may be time to include a new marketing goal for every campaign: “Compliance with all of the relevant laws to avoid prosecution and to protect our brand integrity and reputation”.
To achieve this goal, the team leading the marketing function must have significant experience in navigating the complex regulatory frameworks that the Australian Competition & Consumer Commission (ACCC) has in place. If it doesn’t it must call upon that expertise.
In this business landscape, the business needs to develop a formal framework and approval process where any promises made by the marketing team are vetted for regulatory compliance.
I ask again: Should a business entrust the marketing to the marketers?
My answer is: Only if there are adequate processes in place to ensure compliance with the relevant laws.