Learn from the mistakes of these six big brands and avoid the consequences of misleading advertising. Written by Zaven Mardirossian, Matthew Lees and David Robbins.

In recent years regulators have been cracking down heavily on advertising they consider misleading. The message is clear: consumers are entitled to reliable, truthful and accurate information, and sellers must compete on a level playing field when advertising their products.

Many well-known businesses have come under the spotlight, including ALDI, Bet365, Dulux, Heinz, Optus, Reckitt Benckiser, Smith’s and Unilever. It is common and easy for complaints about advertising to be referred to a regulator – typically by a disgruntled competitor, customer or consumer group.

Regulators don’t have the resources to take on all cases, but will often take action where the advertising could cause widespread consumer detriment, and particularly where a well-known business is involved.

Dealing with regulators can be a massive drain on business resources, not to mention the costs and potential bad publicity involved. To keep your advertisements out of trouble, the key question to ask yourself is: does the overall impression match the facts? If the answer is ‘no’, you need to go back to the drawing board.

Here’s six tips with some case study examples to help you create attractive advertising that’s not misleading.

 

1. View your claims and statements from the perspective of the potential customer

Create an impression that is accurate and consistent with the message you want to convey. Make sure you provide the full picture and do not leave out any important information. Your claims and statements should also be easy to understand.

 

Case study: Bet365

Online betting provider Bet365, ran a promotion offering $200 of free bets for new customers in Australia. The ‘free’ bet offer had several restrictions that Bet365 did not bring to customers’ attention. These included customers having to deposit and gamble their own money before being able to withdraw any winnings.

The Federal Court found that Bet365’s ‘free’ bet representations were misleading and deceptive and ordered Bet365 to pay penalties of $2.75 million and to email corrective notices to affected customers.

 

2. Your claims and statements must have a reasonable basis

Claims and statements made in your advertisements should be based on accurate and reliable information. Differing views should be considered, particularly if the claim is controversial and likely to be challenged. Certain claims may need to be expressed in less definitive terms – for example, by using the word ‘generally’ or ‘many’, rather than ‘all’.

 

Case study: Heinz

In a matter that is still before the courts, the Australian Competition and Consumer Commission (ACCC) alleges that Heinz made false and misleading claims in relation to its Little Kids Shredz range of food products for one to three year old children. The products’ packaging shows images of fruit and vegetables and contains statements such as ‘99% fruit and veg’ and ‘Our range of snacks and meals encourages your toddler to independently discover the delicious taste of nutritious food’.

The ACCC alleges that these claims inaccurately convey that the products – which are mostly made from high-sugar fruit juice concentrate and pastes – have the same nutritional value of fresh fruit and vegetables, and are healthy for children aged one to three years old.

 

3. Your claims must be capable of substantiation if required

Regulators have the power to issue a ‘substantiation’ notice requiring a business to provide material to support claims used to promote goods and services. For example, a notice may be used in response to claims about product pricing (e.g. was/now pricing), composition, nutritional benefits, environmental benefits, place of origin and safety.

It is important to keep records of all relevant supporting material, such as product testing.

 

Case study: Nurofen

Between 2011 and 2015, Reckitt Benckiser (Australia) Pty Ltd made clear on its product packaging and website that Nurofen Specific Pain products were formulated for, and targeted at, a specified type of pain – back pain, period pain, migraine pain, and tension headache – when this was not the case.

Each of the products – which were sold at a premium price – contained the same active ingredient, which had the same effect in treating the particular symptoms of the pain specified on the packaging.

The Court found that Reckitt Benckiser engaged in misleading and deceptive conduct and ordered it to pay a $1.7 million penalty. This was appealed by the ACCC and increased to a $6 million penalty in December 2016.

 

4. Disclaimers must not contradict the headline message

Disclaimers cannot correct misleading information in the main body of an advertisement. They should be used to provide supplementary information only. Do not hide important conditions, exceptions or exclusions in fine print.

 

Case study: Unilever and Smith’s

The ACCC recently investigated Unilever Australia Limited and The Smith’s Snackfood Company Pty Ltd for claims that snacks aimed at school-aged children were healthy foods.

Logos on Unilever’s Paddle Pop Rainbow and Smith’s Sakata Paws Pizza Supreme Rice Snacks packaging suggested that the products were school canteen approved or met school canteen guidelines, despite a disclaimer on the products that stated they met the ‘Amber’ criteria of the National Healthy School Canteens Guidelines, meaning ‘foods that should be selected carefully’.

The ACCC did not consider these disclaimers prominent enough to correct the claims of the logos. Each company paid infringement notice penalties of $10,800 for alleged misleading healthy food representations.

 

5. Be extra careful with comparative advertising

Where an advertisement makes comparisons with other products, the Courts have said there is a ‘heavy responsibility’ to ensure that the comparisons are valid and accurate. This is because errors have a greater potential to mislead consumers than statements in ordinary advertisements.

Comparative advertising is a direct challenge to competitors, so be prepared to back up your claims with supporting material.

 

Case study: Optus

From January 2015 to August 2015, Optus made performance claims that its cable broadband service offered ‘NBN-like speed,’ when in fact it didn’t. The claims were made on websites, billboards, catalogues and flyers. The ACCC had reasonable grounds to believe that these claims were unproven.

As a result, Optus paid infringement notice penalties of $51,000 for alleged false or misleading claims about its cable broadband internet speeds. It also voluntarily entered into a written agreement with the ACCC acknowledging certain conditions and that its conduct may have breached the Australian Consumer Law.

 

6. Treat social media as advertising and make sure reviews are genuine

All social media channels, including Facebook, Instagram, Twitter and YouTube, should be seen as another form of advertising, and treated accordingly. It is your responsibility to check that content on your business’ social media pages is accurate and not misleading, irrespective of who put it there.

Be open and transparent about any commercial relationships (i.e. incentives) relating to reviews, and be aware that selectively removing or editing negative reviews may be misleading.

 

Case study: True Value Solar

From February to September 2015, True Value Solar ran a program offering customers a free solar panel service valued at $199 for publishing a review on the online review platform Product Review (www.productreview.com.au).

The incentive was only offered to customers likely to leave a positive review of True Value Solar, having previously indicated their positive experience. True Value Solar’s free service incentive offer was not disclosed in the reviews published.

Following contact by the ACCC, True Value Solar discontinued offering incentives for positive online reviews.

 

Zaven Mardirossian, Matthew Lees and David Robbins, are from the competition team at law firm Arnold Bloch Leibler. This article is an edited version of Arnold Bloch Leibler’s guide, ‘Six tips for creating advertising that’s not misleading’.

Note that this is a ‘general tips’ information guide only. It is not legal advice and is not an exhaustive list of factors relevant to whether a claim or statement is misleading or deceptive.

 

–

Further reading

• Thinking of rebranding? Avoid legal headaches with these five points »

–
Image copyright: nejron / 123RF Stock Photo