Most businesses are more than aware of the general prohibition against misleading or deceptive conduct, contained in s.52 of the Trade Practices Act 1974 (Cth) and the fair trading legislation of the relevant States and Territories. However, the ACCC continue to receive complaints and take action against businesses that still find themselves risking contravention of the section. A particular danger area in this regard is the use of powerful marketing words in advertisements, such as the word “free”.
Dodo Australia Pty Ltd recently found themselves under scrutiny from the ACCC regarding its “FREE $29.20 Mobility Cap Plan”, “FREE Fuel” and “Cash Offer” 24 month mobile cap plan offers. The relevant advertisements represented that consumers would receive a computer, a fuel card or cash, for free, upon signing up to any of the “free” offer plans.
Concerned that the advertisements were likely to mislead or deceive consumers, the ACCC investigated the offers and revealed that the goods offered were not actually “free”. In fact, consumers could enter into other mobile cap plans with Dodo that were comparable in value and services to the “free” offer plans, for up to $30 per month less where the plan did not include the “free” offer.
As consumers ourselves, we can all recognise the appeal in an advertisement offering something for free. Therefore, the ACCC are particularly wary about offers containing such marketing phrases.
Dodo has now ceased publishing the advertisements. Once aware of the ACCC’s concerns, Dodo commenced corrective action which included refunding customers and reducing the monthly fees on the “free” offer plans, to ensure that customers who had entered into the “free” offer plans would actually receive the items for free. Dodo has also provided a court enforceable undertaking.
Ultimately, businesses must consider what overall impression an advertisement or offer conveys in the mind of the customer. It is important that any product offered for “free” is actually free, and that the cost of the goods is not otherwise recouped.
Businesses should consult their lawyer if they have any concerns as to the legality of their advertisements.