Section 29 of the Australian Consumer Law (s. 53 of the Trade Practices Act) deals with false or misleading representations and states that:

While s. 18 of the ACL (TPA s. 52) is very general, s. 29 of the ACL (TPA s. 53), dealing with false or misleading representations, is comparatively specific. It outlines specific types of behaviour which, if breached by a person engaged in trade or commerce in the supply of goods or services, can amount to an offence under Chapter 4 of the ACL (TPA Pt VC). Further, a breach of ACL s. 29 can result in an injunction under ACL s. 232 (TPA s. 80), damages under ACL s. 236 (TPA s. 82), as well as other orders under ACL s. 237 (TPA s. 87). These remedies are discussed in detail below.

Importantly, ss. 29(1)(e) and (f), concerning testimonials, and 29(1)(n), concerning requirements to pay for certain contractual rights, are new provisions.  They add to the list of representations that were expressly prohibited in the former TPA s. 53.  Further, s. 29(2) provides that, “in… a proceeding concerning a representation of a kind referred to in ss. 29(1)(e) or (f), the representation is taken to be misleading unless evidence is adduced to the contrary.”

Another point to note is that the terms of the ACL imply a wider application by substituting “person” for “corporation,” which was the term used in the TPA provisions.

4.5.1 False representations as to standard, quality, value, grade, composition, style or model, history or particular previous use

Sections 29(1)(a) and (b) regulate representations relating to issues such as the standard, quality, value and grade of goods and services respectively. The application of these sections is illustrated in Australian Competition & Consumer Commission v Nissan Motor Co (Australia) Pty Ltd.^[1]  The case involved a car manufacturer who had advertised a car of a particular model in a newspaper. The advertisement contained a picture of a car, however, it turned out that the car in the picture was not of the model being described in the advertisement. The car manufacturer pleaded guilty of falsely representing that the goods were of a particular style and model in contravention of s. 53(a) (ACL s. 29(1)(a).

4.5.2 Falsely represent that goods are new

There are instances where a seller falsely claims that the goods being sold are new. Cases involving such behaviour typically relate to car sales. Section 29(1)(c) makes such conduct unlawful. In Henderson v Bowden Ford Pty Ltd,^[2] a car dealer sold what he claimed to be a new car, when in fact it was a superseded model with a 20 month-old compliance plate.

4.5.3 False or misleading representation that purports to be a testimonial relating to goods or services; or that concerns a testimonial, or representation purporting to be a testimonial, relating to goods or services

Subsections 29(1)(e) and (f) of the ACL apply to all testimonials, irrespective of whether the representations made were genuine.  These provisions conveniently capture material published via social media, such as Facebook or Twitter, even if the testimonial was posted by a person other than the person who controls the website or page.  One such example is the recent case of Australian Competition and Consumer Commission (ACCC) v Allergy Pathway Pty Ltd (No 2).^[3]  In that case the respondent had published client testimonials on its company website, on its Facebook and Twitter pages and on its Facebook “wall.”  In an earlier proceeding,^[4] Allergen Pathway was found to have contravened the TPA by making false, misleading and deceptive representations in relation to its ability to test for, identify and treat allergies.  Allergen Pathway was ordered to publish corrective advertising and gave undertakings to the court, including that it would remove its client testimonials, which added “an air of legitimacy to Allergy Pathway’s misleading claims…” Having failed to remove the testimonials, the company and its sole director were found guilty of contempt and were ordered to pay fines and to publish further corrective advertising.

In another proceeding, the ACCC accepted an undertaking from a company, Citymove Pty Ltd,^[5] who was found to be in contravention of ss. 29(1)(e) and (f).  In its undertaking, Citymove admitted to having copied genuine consumer testimonials from an unrelated customer review website, modifying them and then pasting the modified testimonials on a website which was being constructed for Citymove and purported to contain authentic removal company reviews.

4.5.4 Falsely represent that a particular person has agreed to acquire goods or services, or that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have

A seller may seek to put goods or services in favourable light by claiming that they have some form of association with, sponsorship from, or approval by, a particular individual or organisation. Similarly, and for the same reasons, claims may be made to the effect that goods or services have certain performance characteristics, accessories, uses or benefits. If such statements are untrue, s. 29(1)(d) and/or s. 29(1)(g) may have been violated. Furthermore, the first described type of behaviour may violate passing off laws (see Chapter 5).

In Seven Network Ltd v News Interactive Pty Ltd, Tamberlin J noted that:

In considering whether and what associations are conveyed by a representation it must be kept in mind that even vague suggestions are capable of evoking or conveying an association … the association need not be indicated in a manner which is very obvious but can consist of a subtle or pervasive suggestion.^[6]

An example of such a subtle suggestion can be found in Twentieth Century Fox v South Australian Brewery Co Ltd.^[7]  The Court held that the use of the words “Duff Beer” on a beer can label gave rise to an association between the beer and the well-known television series ‘The Simpsons’ (“Duff” is the fictional beer brand preferred by the main characters).

An example of a benefit that a product was claimed to have, but did in fact not have, occurred in Ferro Corp (Aust) Pty Ltd v International Pools (Aust) Pty Ltd.^[8] The product in question was used as a tie layer in fibreglass swimming pools. Ferro’s employees represented that it had certain qualities and was a superior product, thus inducing International Pools to enter into a supply contract. However, the product was later found to be defective, and Ferro was held liable for breach of contract and of s. 52, s. 53(a) and s. 53(c) of the TPA (respectively, s 18 and ss 29(1)(a) and (g) of the ACL).

Another example of a breach of s. 29(1)(g) (former TPA s. 53(c)) involved false representations about the benefits of oral contraceptives in ACCC v Hughes.^[9]  The case involved product sold over the Internet and falsely claimed to have “nil side effects”, amongst other things. Similarly, in ACCC v Danoz Direct Pty Ltd,^[10] an advertisement in which a company claimed its machine would cause weight loss and improve muscle tone was held to have breached s. 53(c).

4.5.5 Person claiming to have a sponsorship, approval or affiliation it does not have

A person may seek to put themselves in favourable light by claiming some form of affiliation with, sponsorship from, or approval by, a particular individual or organisation. If such statements are untrue, s. 29(1)(h) of the ACL (former TPA s. 53(d)) may have been violated. The close connection between a corporation (or “person” in s 29(h)) and the goods or services that it supplies means that actions taken in relation to s. 29(1)(g) (TPA s. 53(c)) often also involve a claim under s. 29(1)(h) (TPA s. 53(d)), and vice versa. Furthermore, such behaviour may violate passing off laws (see Chapter 5).

In ACCC v Chen,^[11] an individual located in the US had placed a website on the World Wide Web. The website was very similar to, and had a domain name confusingly similar to, the official website for the Sydney Opera House. The operator of the website was found to have represented an association with the Sydney Opera House. An injunction was granted against the respondent, but on more limited terms than what the ACCC sought, as the respondent had ceased his misleading activities. However, the Court was concerned he could resume such activity. Also, for policy reasons, an injunction granted in Australia would aid the ACCC in convincing its American counterpart to take the same, or a similar, action there.

4.5.6 False or misleading representation with respect to the price of goods or services, concerning the availability of facilities for the repair of goods or of spare parts for goods or concerning the place of origin of goods

Subsections 29(1)(i), 29(1)(j) and 29(1)(k) of the ACL (formerly TPA ss. 53(e), 53(ea) and 53(eb), respectively) regulate false or misleading representations with respect to the price of goods or services, concerning the availability of facilities for the repair of goods or of spare parts for goods, or concerning the place of origin of goods.

In ACCC v Allans Music Group Pty Ltd,^[12] the gist of the false and misleading representations was that there was an opportunity in the pre-Christmas period where substantial bargains could be obtained. This was false because the items in question had not been sold in the pre-Christmas period at the listed “WAS” price in the catalogue but at prices that were significantly below the claimed “WAS” price. The false or misleading representations with respect to the price of the goods were in regard to the “WAS” price, which misrepresented the savings to be had.

The most commonly disputed representations within this category are doubtlessly misrepresentations relating to the place of origin of goods. In ACCC v 4WD Systems Pty Ltd,^[13] for example, 4WD Systems Pty Ltd made false or misleading representations concerning the place of origin of goods. It failed to inform the franchisees that the product had changed before the orders were filled. It advertised in various magazines that the product supplied was the US-made diff lock. It expressly made representations that the product was the same and had not changed.

The issue of place of origin has been so controversial that Division 1AA was introduced in the TPA to outline the types of country of origin representations that did not contravene s 52, s. 53(a) or s 53(eb) (or s 75AZC(1)(a) or (i)).  The corresponding sections in the ACL are found in Part 5-3 – Country of origins representations.  The part provides that certain country of origin representations made about goods do not contravene s. 18 (which deals with misleading or deceptive conduct); or ss. 29(1)(a) or (k) or 151(1)(a) or (k) (which deal with false or misleading representations).  The requirements to be met for a certain representation not to contravene those sections are set out in a table in s. 255:

For a representation as to the country of origin of goods, the requirements to be met are:

The term “substantially transformed” is discussed further in s. 255 (3) (formerly TPA s. 65AE(1)):

For a representation that goods are the produce of a particular country, formerly the subject of s. 65AC of the TPA, the requirements to be met for the representation not to contravene the ACL, ss. 18, 29(1)(a) or (k) or 151(1)(a) or (k) are:

Somewhat similarly, item 3 in the table in s. 255(1) (formerly TPA s. 65AD) puts in place some limitations on persons making representations as to the country of origin of goods by means of a logo specified in the regulations.

Section 255 then goes on to expand the range of country or origin representations that were formerly covered by Division 1AA of the TPA.  For a representation that goods were grown in a particular country, the requirements to be met are:

Item 5 in the table in s. 255 provides slightly more restrictive requirements for a representation that ingredients or components of goods were grown in a particular country, including:

4.5.7 False or misleading representation concerning the need for any goods or services

Actions in relation to ACL s. 29(1)(l) (formerly TPA s. 53(f)) are commonly set in the context of car repairers claiming that more work is necessary than actually is the case. For example, in Peter James Dawson v Motor Tyre Service Pty Ltd,^[14] a car owner was told that certain work was necessary to address a vibrations problem. Independent tests showed that no such work was in fact necessary. However, Fisher J noted that:

In the context of such conflicting views from so many experienced technicians it is as well to reiterate the issue before me as I see it, namely whether I can be satisfied beyond reasonable doubt that the quoted work or some part thereof was not needed. It is axiomatic and indeed accepted by both parties that there is no obligation upon the defendant to establish that any of that work was necessary. The need for the work was a matter of judgment and in the circumstances of this case not capable of positive proof one way or the other. The prosecutor must discharge the onus of establishing to the relevant degree of certainty that the fact that the work was not needed was the only judgment or opinion which reasonably could be held. Any reasonable doubt must be resolved in favour of the defendant. Furthermore I accept the submission of counsel for the defendant that work which is desirable or preferable is “needed”.^[15]

In light of this, the charges were dismissed.

4.5.8 False or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy

Violations of s. 29(1)(l) (formerly TPA s. 53(g)) frequently occur in the context of businesses’ return policies. For example, in Miller v Fiona’s Clothes Horse of Centrepoint Pty Ltd,^[16] the defendant had a “No refund” policy expressed through signs placed in the stores. Further, the policy was expressed on the sales dockets printed by the defendant, as well as orally by the defendant’s staff. The Court found this to be a violation of s. 53(g) as the representation did not accurately reflect the buyers’ legal rights: “The signs [and the other modes of communicating the misrepresentations] would certainly be likely to mislead many customers about their rights, and deter some from seeking a refund where a refund was an appropriate remedy”.^[17]