Recent  Trends  in  Misleading  and  Decep2ve  Conduct  Cases    

Katrina  Groshinski,  Partner    Minter  Ellison  Lawyers    

3  October  2014  

   

1.  Misleading or deceptive conduct – overview of the law

2.  Golden rules & common misconceptions

3.  Recent trends – ‘absolute’ terms and fine print

4.  Questions?

 

Overview  

 

Overview  

•  Australian Securities and Investments Commission Act 2001 •  General prohibition in relation to financial

services – Section 12DA •  Specific prohibition relating to misleading the

public – Section 12DF •  Other prohibitions on bait advertising,

pyramid selling, offering gifts, rebates etc •  Corporations Act - Section 1041H •  Very similar to prohibition on misleading

or deceptive conduct in section 18 of the Australian Consumer Law

•  Applies to all promotions in all media

The  law  

•  Enforced by ASIC •  Fines $1.7m / $340k per breach (or

per set of breaches of a similar nature around the same time)

•  Other remedies include adverse advertising orders

•  Private parties can also sue – usually seeking injunctions (ie to prevent further publication) and/or damages

•  ….not to mention reputational damage and business disruption

The  consequences  

•  When will an advertisement be likely to ‘mislead or deceive’?

•  ‘Tendency to lead into error’ on the facts of each case - ie: –  real (i.e. not remote) chance or possibility –  that an ordinary and reasonable person –  in the audience to whom the statement was

directed –  would be led into error –  by the ‘overall impression’ conveyed

•  Context is therefore extremely relevant

 

General  principles  

•  Additional rules against specific false or misleading representations

•  Includes (for example): •  Particular standard, quality, value, grade •  A particular person has agreed to acquire

services •  Sponsorship, approvals, performance

characteristics, uses or benefits •  There need for the services •  The price •  Testimonials

•  Focus on general misleading conduct prohibition as breach ‘threshold’

 

Specific  rules  

 

•  Who is the relevant ‘audience’? •  Cannot presume any ‘special knowledge’ about

financial services or credit

•  What is a ‘reasonable person’? •  Range of class from astute to inexperienced •  Practical rule of thumb: unsophisticated and

uninformed consumer

•  What is the ‘overall impression’ conveyed? •  For advertising (‘unbidden intrusions’), the overall

impression is often determined by the dominant impression

 

General  principles  

 

Common  misconcep?ons  

Common  misconcep?ons  

•  We  didn’t  say  anything…  –  Decep?on  may  result  from  silence  or  omission  –  OBen  what  you  leave  out  

•  It’s  OK  because  its  literally  true  –  It’s  the  overall  impression  that  maEers  –  can  be  

misleading  even  where  statements  are  literally  true  

Common  misconcep?ons    

Common  misconcep?ons  

•  It’s  OK  to  make  predic@ons  /  promises  about  the  future  –  Must  have  a  reasonable  basis  –  Presumed  not  to  have  reasonable  grounds  

unless  you  produce  evidence  to  contrary  

Common  misconcep?ons  

•  But  that’s  what  it  means  in  the  industry  –  A  ‘general’  audience  will  nor  be  

presumed  to  have  special  knowledge  about  your  business’  products  or  services    

–  For  example,  this  means  can’t  presume  familiarity  with  common  terms  and  condi@ons  etc  if  promo  targets  new  customers  

But  its  in  the  fine  print!  Beware  disclaimers  

•  Only  have  limited  applica?on  •  Ineffec?ve  if  dominant  impression  is  misleading    

•  Can  only  be  used  to  further  explain  a  condi?on  –  not  contradict  

•  Sufficiently  prominent  to  distract  aEen?on  

Focus:  where  are  the  ACCC  now  on  fine  print  in  adver2sing?  

 •  The audience pool

•  Broadcast – no special knowledge

•  A ‘reasonable person’ in that audience •  Unsophisticated and inattentive

•  Fine print will rarely create an accurate ‘overall impression’ where the ‘dominant impression’ is misleading on its own •  Consider:

•  Relative prominence: size, location, duration •  Content: clarify, not contradict •  Context: don’t let the visual let you down

Prac?cal  lessons  for  use  of    fine  print  in  adver?sing  

•  Size: how big? •  Actively distract audience attention

•  Duration: how long? •  Long enough to be read…carefully •  Industry guidelines are no defence

•  Location: where? •  Same medium as the message it relates to (eg

voiceover claim needs voiceover clarification) •  Subsequent disclosures rarely adequate: online eg

each screen / banner must stand alone without requiring further information (dominant impression)

•  Consider appropriateness of the medium for the message

•  Example: iiNet, TPG, Jetstar

1.  Rela?ve  prominence  

…and  in  a  web  context?  

ACCC v Jetstar, Virgin – proceedings issued 19 June 2014 Graphic: Australian Business Traveller www.abt.com.au

(General  example)  

 …even  where  prominent  on  landing  page  

ACCC v Jetstar, Virgin – proceedings issued 19 June 2014 Graphic: Australian Business Traveller www.abt.com.au

ASIC  is  very  concerned  about  fine  print  in  adver?sing  for  financial  products  or  services  

ASIC  fines  NAB  •  NAB’s  subsidiary  Ubank  ran  a  series  of  ads  adver?sing  “The  Best  $2014  ever”  and  “Own  $2014”  indica?ng  that  customers  that  took  out  a  home  loan  would  receive  $2014  

•  Qualifica?ons  were  set  out  in  very  fine  print:  •  Minimum  $350,000  loan  •  Need  to  use  FASTRefi  seElement  process  •  Cap  on  number  of  customers  that  can  take  up  the  offer  

•  ASIC  issued  an  infringement  no?ce  –  NAB  paid  

ASIC  fines  SuperHelp  •  SuperHelp  put  out  an  ad  in  the  AFR’s  Smart  

Investor  Magazine  •  The  ad  made  claims,  highlighted  in  red,  about  

SuperHelp’s  SMSF  accoun?ng  and  administra?on  services.  

•  However,  fund  setup  was  only  free  if  half  the  admin  fee  was  paid  up  front,  and  pension  setup  was  only  free  for  people  over  60.  

•  ASIC  issued  an  infringement  no?ce  even  though  the  ad  said  ‘condi?ons  apply’  

•  SuperHelp  paid  

 

•  Can only be used to further explain a condition – not contradict the expectation raised by the ad itself

•  Avoid absolute language that requires qualification

•  Examples: Coles ‘Fresh’; bet365 (claim)

2.  Content  

Text  template  ?tle  

bet365  claim  re  two  banner  ads  

The  ACCC’s  view  on  what  would  not  be  misleading  

Offer  must  ‘clearly  and  prominently  state,  in  type  the  same  size  and  colour  as  and  in  close  proximity  to  the  words  ‘free’  or  ‘bonus’  or  equivalent  word,  the  existence  if  any  condi@ons  to  the  following  effect  which  may  apply  to  that  offer:  

(i)  That  the  offer  is  not  available  for  bets  at  odds  less  than  [x];  (ii)  That  any  ‘free  bets’  or  ‘deposit  bonus’  and/or  any  winnings  from  

any  ‘free  bets’  or  ‘deposit  bonus’  are  forfeited  unless  the  customer  complies  with  certain  other  condi@ons  within  a  certain  @meframe;  

(iii)  That  the  value  of  the  ‘free  bets’  is  limited  by  the  size  of  the  customer’s  first  deposit;  

(iv)  That  residents  of  Victoria,  New  South  Wales,  South  Australia  and  Western  Australia  are  not  eligible  for  the  offer.  

 

…and  bet365  now  (first  @me  site  visitors)  

     

…with  t’s  and  c’s  on  same  screen  (scroll  down)  

•  Consider the impression created by both your graphics, voiceover/text, logos, brand…

•  Example: Optus

3.  Context  

Reframing  the  compliance  ques?on    •  Don’t ask: what is the message that an

attentive, intelligent person would draw upon a diligent examination of all elements of this communication?

•  Ask: what is the dominant grab that an inattentive, unsophisticated person with no special knowledge about our products, would take from this communication?

•  Be more creative at the outset – clear claims that don’t require qualification, in appropriate mediums

Ques?ons  /  comments?