How to keep online retailers accountable for their promises

Online retailers make many claims and representations to position their products and services above those of their competitors. Some might stretch the truth a little, while others know no limits when it comes to getting their lion’s share of the market.

However, what are the rules when it comes to the claims and representations made by retailers?

And what questions should consumers ask before relying upon cleverly crafted wording of those competing for the online dollar?

Australian Consumer Law

The Australian Consumer Law (ACL) serves a number of purposes. Perhaps the most important being the protection of consumers from unconscionable business people and the regulation of the behaviour of Australian businesses.

The ACL includes provisions that prohibit a person or business from engaging in misleading or deceptive conduct. These provisions exist to protect consumers from the type of conduct which some retailers use to mislead and deceive consumers to increase the likelihood of purchases being made. For example, a retailer might misrepresent that:

  • their goods have originated from a certain country or region;
  • their goods or services have certain performance characteristics;
  • their goods are of a particular standard, quality, value, grade, composition, style or model, or have had a particular history or particular previous use; or
  • their goods or services have the sponsorship or endorsement of, or affiliation with, a certain person.

Quality and history

A retailer must not make a misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model, or have had a particular history or previous use. For example, when a retailer makes a claim that hens were farmed in conditions where they were able to move freely on open ranges, when in fact they were not, then that will be a misrepresentation as to the quality and history associated with the eggs.

Performance characteristics

A retailer must not make a false or misleading representation that goods or services have certain performance characteristics. For example, when a manufacturer or seller of plastic bags promotes their bags as being biodegradable, those bags must be biodegradable. If not, then the manufacturer or seller will be in breach of the ACL.

Sponsorship or approval

A retailer must not make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation. For example, a business is prohibited from representing that a sportsperson, celebrity chef, or television personality uses their products or services if that is not the case.

Bait advertising

Bait advertising takes place when an advertisement promotes certain prices on products, which are not available, or that are only available in very limited quantities. For example, if an airline advertises a domestic flight for only $19, but only has a total of 15 seats available, then that is likely to be a breach of the ACL. However, if the business is upfront in a highly visible, clear and specific way about the sale product being in short supply, or on sale for a limited time, then that is less likely to be misleading.

Fine print and qualifications

Advertisements often include some information in fine print. However, the fine print must not contradict the overall message of the advertisement. For example, if an advertisement states that a product is free, but the fine print indicates that a payment must be made, then the advertisement is likely to be misleading.

So, what questions should you ask?

Before committing to any online (or offline) purchase, ask yourself the following three questions:

  1. Who am I about to buy from and are they credible?
  2. Are the seller’s goods and services likely to match the representations and claims being made?
  3. What are my options if the seller’s goods or services are not as they are represented?

If you are satisfied with your answers to the above questions, then go ahead and enjoy the benefits of shopping online. If not, then you might like to reconsider your purchase and you always have the option to report misconduct to the Australian Competition and Consumer Commission (ACCC) for investigation. After all, under the ACL, a retailer need not intend to mislead or deceive consumers. The mere potential to do so will be enough.

  • This article is provided for general information purposes only and is not intended to be specific advice for your business needs.