The Guardian estimates that in a single day a person will be exposed to 3,500 different advertisements, 99% of which will have absolutely no impact on that person.[1] It is therefore not surprising that many businesses push the boundaries with their advertisements in order to try and join that 1% of successful advertisements.

The problem is that when your business pushes the boundary too far, it can be exposed to claims that the advertisements are misleading.  In the event that such claims are made, then your business could face serious repercussions.

This could include having to pay fines or penalties to the government, having to pay compensation to competitors or consumers, having the advertisement banned, and reputation or brand damage with both current and potential consumers.

 n this article we consider some recent allegations of misleading advertising made against food retailers in both Australia and the United Kingdom.  We also outline some advertising techniques which are prohibited under Australian law.

 Fresh bread leads to fresh claims of misleading advertising

Recently the Australian Competition and Consumer Commission (“ACCC”) commenced Federal Court proceedings against Coles Supermarkets accusing them of having misleading advertisements.[2]  In these proceedings the ACCC is alleging that Coles was misleading in its advertisements which stated that its bread was “Freshly Baked in Store” because the bread was actually made off-site, frozen, shipped to the supermarket stores and then either baked or part-baked in store.

Interestingly, Coles’ seems to have repeated the advertising mistake which had previously been made by UK supermarket Tesco. In 2010 Tesco had its bread advertisements banned when the Advertising Standards Authority rules that putting pre-made loaves into ovens was not “bread baked from scratch.”[3] Both these cases demonstrate the importance of having clear advertisements. Where advertisements are considered misleading, this can result in litigation, potentially having the advertisements banned and significant negative publicity which ultimately erodes the business’ goodwill with consumers.

On 14 July 2013 the Sydney Morning Herald reported that Woolworths and Coles customers are being misled in regards to sourdough bread.[4] It appears that the sourdough breads made by Woolworths and Coles contain additives, including citric acid and yeast cultures, in order to speed up the baking process. Bakers are concerned that this is misleading customers since a traditional sourdough only contains flour, water and salt.  While these advertisements have not yet been subject to any formal complaints or prosecutions, they demonstrate that when advertisements are not 100% accurate they can lead to claims that they are misleading.

The “usual suspects” behind complaints of misleading advertising

Accusations that advertisements are misleading can come from a wide range of sources including from competitors, consumers, and government regulators. 

Competitors or consumers can commence litigation against a business for misleading advertising. Litigation can be costly for a business and can result in having to pay compensation to the competitor or consumer.

Both competitors and consumers have the ability to complain to the Advertising Standards Board. This could result in the advertisement being banned.

A government regulator, like the ACCC, can investigate claims of misleading advertising or act on complaints by consumers or competitors, and in cases where there is misleading advertising, commence litigation, impose penalties, or cause corrective advertising to be published.

Ultimately it’s relatively easy for a competitor or consumer to make a complaint that an advertisement is misleading.

Know your advertising techniques – which techniques might be considered misleading

Advertisements which are found to be misleading usually stem from the misleading and deceptive conduct provisions located within the Australian Competition and Consumer Act.[5]Although all advertisements are different, below we list several advertising techniques which commonly lead to accusations that advertisements are misleading.

  1. Misleading and Deceptive Conduct generally –  Although not strictly a technique, advertisements can generally be considered misleading if they make inaccurate statements to consumers in any trade or commerce. An example of this is in 2005, where Flight Centre was seen to mislead consumers because its slogan suggested the “Lowest Prices Guaranteed” when it fact it did not offer the lowest prices for all flight.[6]
  2. Bait Advertising – Bait advertisements are where businesses offer one product in advertisement in order to get consumers into their stores to buy another, more expensive product.  In 1998 Crazy Johns was seen to have used bait advertising by offering phones for $49 in newspaper advertisements, even though most stores were out of stock of those phones.[7]
  3. Two-price advertising – This occurs where businesses compare its current price to a previous price or to the recommended retail price.  This is a legal approach to advertising so long as the prices are accurate.  In 2008 Prouds Jewellers were seen to have misled consumers when its catalogue referred to “was” prices which were not actually offered in its stores.[8]
  4. Comparative Advertising - Comparative advertising exists when one business compares its goods against the goods of a competitor. Although comparative advertising is allowed, the business making the comparison must ensure that the comparison is accurate. In 2001 Panadol was seen to have engaged in misleading advertising when it compared its products to those of Heron.[9] Panadol stated that its product was made in Australia whilst Heron's was made in the USA. However the comparison was of different types of products, and failed to note that Panadol also has a gel cap made in the USA.
  5. Fine Print qualifiers –Fine print qualifiers can be seen as misleading when the fine print is inconsistent or contradictory to the rest of the advertisement.  In 2011 Harvey Norman was seen to have been misleading in its use of fine print qualifiers particularly because its catalogue seemed to indicate that the offers were on sale everywhere, whilst the fine print suggested it was only in one store in each Australian state.[10]

The wrap up

Given the vast amount of advertising which consumers are exposed to, it’s understandable that business’ want to push the boundaries when it comes to advertising in order to stay competitive in the marketplace. However, businesses do need to take care when creating advertisements because pushing the boundaries too far can result in advertisements which are seen to be misleading or deceptive.

Both Coles’ “fresh bread” advertisements and those relating to Tesco serve as timely reminders of where advertisements can be seen as misleading. The recently publicity relating to supermarkets selling bread which imitates traditional “sourdough” also serves as a reminder of the need to be careful when advertising.  

When businesses are accused of being misleading in their advertisements, businesses can face lengthy and costly litigation, fines, advertisements being banned, and negative publicity which erodes the business’ goodwill with consumers.  

Ultimately then businesses should ensure that their advertisements are accurate and straight-forward in order to avoid accusations of misleading advertising.