Main Body
4.6 Other specific false, misleading or deceptive representations or conduct (ss. 30 – 50)
Apart from s. 18 and s. 29 of the ACL (TPA s. 52 and s. 53), Chapter 3 Part 3-1 of the ACL contains several other provisions dealing with specific types of false, misleading or deceptive representations or conduct.
4.6.1 False or misleading representations about sale etc. of land
False or misleading representations in relation to land are dealt with in section 30 (formerly TPA s. 53A):
Australian Consumer Law, s. 30
(1) A corporation shall not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion by any means of the sale or grant of an interest in land:
(a) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or
(b) make a false or misleading representation concerning the nature of the interest in the land; or
(c) make a false or misleading representation concerning the price payable for the land; or
(d) make a false or misleading representation concerning the location of the land; or
(e) make a false or misleading representation concerning the characteristics of the land; or
(f) make a false or misleading representation concerning the use to which the land is capable of being put or may lawfully be put; or
(g) make a false or misleading representation concerning the existence or availability of facilities associated with the land.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) This section does not affect the application of any other provision of Part 2-1 or this Part in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land.
Only a few observations will be made in relation to s. 30. First, many of the terms used in this provision, such as “person” and “in trade or commerce”, have been dealt with elsewhere (Chapter 2). Second, large parts of s. 30(1) are very similar to what was discussed in relation to s. 53.
4.6.2 Misleading conduct in relation to employment
Section 31 (formerly TPA s. 53B) regulates misleading conduct in relation to employment:
Australian Consumer Law, s. 31
A person must not, in relation to employment that is to be, or may be, offered by the person or by another person, engage in conduct that is liable to mislead persons seeking the employment as to:
(a) the availability, nature, terms or conditions of the employment; or
(b) any other matter relating to the employment.
Note: A pecuniary penalty may be imposed for a contravention of this section.
In Darmody v National Centre Automotive,[1] the respondent was ordered to pay damages for acting in breach of TPA ss. 52 and 53B (ACL ss. 18 and 31) by falsely representing to the applicants that they would be employed by the respondent’s car dealership if they resigned their employment with another car dealership.
4.6.3 Offering rebates, gifts, prizes etc.
Australian Consumer Law, s. 32
(1) A person must not, in trade or commerce, offer any rebate, gift, prize or other free item with the intention of not providing it, or of not providing it as offered, in connection with:
(a) the supply or possible supply of goods or services; or
(b) the promotion by any means of the supply or use of goods or services; or
(c) the sale or grant, or the possible sale or grant, of an interest in land; or
(d) the promotion by any means of the sale or grant of an interest in land.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) If a person offers any rebate, gift, prize or other free item in connection with:
(a) the supply or possible supply of goods or services; or
(b) the promotion by any means of the supply or use of goods or services; or
(c) the sale or grant, or the possible sale or grant, of an interest in land; or
(d) the promotion by any means of the sale or grant of an interest in land; the person must, within the time specified in the offer or (if no such time is specified) within a reasonable time after making the offer, provide the rebate, gift, prize or other free item in accordance with the offer.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(3) Subsection (2) does not apply if:
(a) the person’s failure to provide the rebate, gift, prize or other free item in accordance with the offer was due to the act or omission of another person, or to some other cause beyond the person’s control; and
(b) the person took reasonable precautions and exercised due diligence to avoid the failure.
(4) Subsection (2) does not apply to an offer that the person makes to another person if:
(a) the person offers to the other person a different rebate, gift, prize or other free item as a replacement; and
(b) the other person agrees to receive the different rebate, gift, prize or other free item.
(5) This section does not affect the application of any other provision of Part 2-1 or this Part in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land.
The use of s. 32 (formerly TPA s. 54) is exemplified in Trade Practices Commission v Calderton Corporation Pty Ltd,[2] where the defendant conducted a “prize contest” in which customers earned points by purchasing the defendant’s products and by engaging in various other activities nominated by the defendant. At the end of the contest, the people with the 10 highest scores would be awarded certain specified prizes.
However, at the time the contest was to end, the defendant concluded that the contest had not been a commercial success. In order to avoid providing the prizes as stated at the outset of the contest, the defendant extended the contest for one extra month. Further, during that month, the defendant introduced fictitious names amongst the names of the genuine contestants. At the end of the extended contest period, the 10 winners were all fictitious contestants, and the defendant did not have to give away any prices at all. Justice Neaves noted that:
[The defendants] have pleaded guilty to the charges against them but it would not be proper, in my opinion, to treat the defendants’ conduct as amounting to anything less than serious breaches of the Act. The prosecution accepts that, at the time the competition was begun, there was no intention on the part of the [defendants] that the prizes advertised would not be provided. This position no longer obtained, however, when the results of the operation of the competition during July and August were assessed and found to be less favourable than had been expected. The conduct then engaged in by the [defendants] cannot be justified or excused. It shows a lack of integrity. To continue to operate the competition and to advertise and promote it knowing that steps were to be taken to ensure that no prizes were to be awarded was reprehensible conduct. It not only amounted to a fraud upon those who were induced to enter into the competition upon the understanding that the prizes advertised were to be awarded to those who accumulated the most “prize dollars” but it demonstrated a complete lack of business morality. Those circumstances alone call for substantial fines to be imposed.[3]
4.6.4 Misleading conduct as to the nature etc. of goods
Australian Consumer Law, s. 33
A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.
Note: A pecuniary penalty may be imposed for a contravention of this section.
Section 33 (formerly TPA s. 55) may be relied upon in conjunction with argued breaches of e.g., ss. 18 and 29 (formerly TPA ss. 52 and 53. Its application is illustrated in ACCC v Cadbury Schweppes Pty Ltd,[4] where the respondent, who had sold fruit-flavoured cordial which in fact did not contain any elements derived from the fruit in question, was found to have acted in breach of, amongst other provisions, s. 55.
4.6.5 Misleading conduct as to the nature etc. of services
Australian Consumer Law, s. 34
A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.
Note: A pecuniary penalty may be imposed for a contravention of this section.
The first thing to note when examining this provision is that, while many other sections of Part V Division 1 refer to conduct that is “likely to mislead”, it refers to conduct that is “liable to mislead”. As noted in Westpac Banking Corporation v Northern Metals Pty Ltd,[5] the words “liable to mislead” are narrower in scope than the words “likely to mislead”. Thus, s. 34 (formerly TPA s. 55A) is more limited in its scope than those provisions that focus on the likelihood of people being misled. Further, as was also observed in the same case, the section is applicable only in relation to the types of conduct specified; in contrast, s. 18, (TPA s. 52) for example, is open to all types of “conduct”. This again limits the scope of s. 34.
4.6.6 Bait advertising
Australian Consumer Law, s. 35
(1) A person must not, in trade or commerce, advertise goods or services for supply at a specified price if:
(a) there are reasonable grounds for believing that the person will not be able to offer for supply those goods or services at that price for a period that is, and in quantities that are, reasonable, having regard to:
(i) the nature of the market in which the person carries on business; and
(ii) the nature of the advertisement; and
(b) the person is aware or ought reasonably to be aware of those grounds.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) A person who, in trade or commerce, advertises goods or services for supply at a specified price must offer such goods or services for supply at that price for a period that is, and in quantities that are, reasonable having regard to:
(a) the nature of the market in which the person carries on business; and
(b) the nature of the advertisement.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
The fact that the law draws a distinction between an offer and an invitation to treat means that businesses are not legally bound to sell, or even have available for sale, the products they advertise. In other words, if a business advertises a particular product, but does not have that product available for sale, a person wanting to buy the advertised product cannot sue for breach of contract, as the advertisement typically constitutes an invitation to treat rather than an offer. Section 35 (formerly TPA s. 56) is aimed to address the concerns that this situation gives rise to; it simply would not be fair for businesses to be allowed to attract potential buyers by advertising products at prices they will not sell the products at.
As has been the case in relation to many of the sections discussed above, the former TPA s. 56 was applied, on several occasions, in relation to car dealers. For example, in Michael Joseph Reardon v Morley Ford Pty Ltd,[6] the defendant had advertised a particular model of Ford Falcon at a special discount price but had taken no steps to secure an adequate supply of such cars. Indeed, potential customers were informed that only one such Ford Falcon was for sale at the discounted price.
4.6.7 Wrongly accepting payment
Australian Consumer Law, s. 36
(1) A person must not, in trade or commerce, accept payment or other consideration for goods or services if, at the time of the acceptance, the person intends not to supply the goods or services.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) A person must not, in trade or commerce, accept payment or other consideration for goods or services if, at the time of the acceptance, the person intends to supply goods or services materially different from the goods or services in respect of which the payment or other consideration is accepted.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(3) A person must not, in trade or commerce, accept payment or other consideration for goods or services if, at the time of the acceptance:
(a) there are reasonable grounds for believing that the person will not be able to supply the goods or services:
(i) within the period specified by or on behalf of the person at or before the time the payment or other consideration was accepted; or
(ii) if no period is specified at or before that time—within a reasonable time; and
(b) the person is aware or ought reasonably to be aware of those grounds.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(4) A person who, in trade or commerce, accepts payment or other consideration for goods or services must supply all the goods or services:
(a) within the period specified by or on behalf of the person at or before the time the payment or other consideration was accepted; or
(b) if no period is specified at or before that time—within a reasonable time.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(5) Subsection (4) does not apply if:
(a) the person’s failure to supply all the goods or services within the period, or within a reasonable time, was due to the act or omission of another person, or to some other cause beyond the person’s control; and
(b) the person took reasonable precautions and exercised due diligence to avoid the failure.
(6) Subsection (4) does not apply if:
(a) the person offers to supply different goods or services as a replacement to the person (the customer) to whom the original supply was to be made; and
(b) the customer agrees to receive the different goods or services.
(7) Subsections (1), (2), (3) and (4) apply whether or not the payment or other consideration that the person accepted represents the whole or a part of the payment or other consideration for the supply of the goods or services.
Looking only at the language used in s. 36 (formerly TPA s. 58), the first part of this section (i.e., subsections (1)-(2)) seems associated with severe difficulties. To be successful, it seems necessary to prove that the alleged offender had no subjective intention to supply the goods or services, or subjectively intended to supply goods or services materially different from the goods or services in respect of which the payment or other consideration is accepted. However, case law suggests that focus ought to be placed on the objective intention of the offender. In Barton v Westpac Banking Corporation,[7] a tour operator (better known for banking activities) accepted payment for a 15-day tour, despite knowing that the duration of some of those 15-day tours had in fact been changed to 13 days due to flight changes. Sheppard J noted how:
In order that a corporation may be shown to have had the requisite intention, those acting for it must be shown to have been in a position to apply their minds to the question of whether what was to be supplied would be something materially different from that for which the customer’s money was accepted.[8]
As it could not be proven that the agent accepting payment was aware that the buyer thought the payment related to a trip of 15 days duration, the action failed.
Looking at subsection (3), on the other hand, it is clear already from the language used that it focuses on objective considerations. In ACCC v Chubb Security Australia Pty Ltd,[9] a company providing security services was found to have contravened TPA s. 58(b) (now ACL s. 36(3)) in contracting to provide services when it was aware that it would not be able to provide such services.
Section 36 is an expanded version of the former TPA s. 58. Firstly, the addition of subsection (4) imposes a mandatory obligation on the supplier of goods or service to supply them within the time specified, or within a reasonable time, with possible pecuniary penalties for contravention of the subsection. Secondly, the use of the words “by or on behalf of” in subsections (3) and (4), which relate to time periods specified for the supply of goods or services, expand the range of instances when a person may be in breach of these subsections, i.e., a person may be in breach if an agent had specified the time periods for supply. Subsections (5) and (6) serve to limit a person’s liability arising out of subsection (4); and subsection (7) has been added to clarify that s. 36 applies in relation to whole or part payments (or other consideration) for the supply of goods or services.
4.6.8 Misleading representations about certain business activities
Australian Consumer Law, s. 37
(1) A person must not, in trade or commerce, make a representation that:
(a) is false or misleading in a material particular; and
(b) concerns the profitability, risk or any other material aspect of any business activity that the person has represented as one that can be, or can be to a considerable extent, carried on at or from a person’s place of residence.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) A person must not, in trade or commerce, make a representation that:
(a) is false or misleading in a material particular; and
(b) concerns the profitability, risk or any other material aspect of any business activity:
(i) that the person invites (whether by advertisement or otherwise) other persons to engage or participate in, or to offer or apply to engage or participate in; and
(ii) that requires the performance of work by other persons, or the investment of money by other persons and the performance by them of work associated with the investment.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
The use of s. 37 (formerly TPA s. 59) is illustrated in Jones v Glen Houn Holdings Pty Ltd (in liq.).[10] In that case, a business offering video franchises was found to have contravened the former TPA s. 59(2) (ACL s. 37(2)) when making statements such as “You WILL double your investment in 8 weeks”, when in fact there was no guarantee that that would happen.
4.6.9 Application of provisions of this division to information providers
Section 38 of the ACL limits the ability of ss. 29, 30, 33, 34 and 37 be applied to information providers. This section mirrors s. 19, discussed earlier under 4.1.2.2 in the context of misleading or deceptive conduct.
4.6.10 Single price to be stated in certain circumstances
Australian Consumer Law, s. 48
(1) A person must not, in trade or commerce, in connection with:
(a) the supply, or possible supply, to another person of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; or
(b) the promotion by any means of the supply to another person, or of the use by another person, of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless the person also specifies, in a prominent way and as a single figure, the single price for the goods or services.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(2) A person is not required to include, in the single price for goods, a charge that is payable in relation to sending the goods from the supplier to the other person.
(3) However, if:
(a) the person does not include in the single price a charge that is payable in relation to sending the goods from the supplier to the other person; and
(b) the person knows, at the time of the representation, the minimum amount of a charge in relation to sending the goods from the supplier to the other person that must be paid by the other person; the person must not make the representation referred to in subsection (1) unless the person also specifies that minimum amount.
Note: A pecuniary penalty may be imposed for a contravention of this subsection.
(4) Subsection
(1) does not apply if the representation is made exclusively to a body corporate.
(5) For the purposes of subsection (1), the person is taken not to have specified a single price for the goods or services in a prominent way unless the single price is at least as prominent as the most prominent of the parts of the consideration for the supply.
(6) Subsection (5) does not apply in relation to services to be supplied under a contract if:
(a) the contract provides for the supply of the services for the term of the contract; and
(b) the contract provides for periodic payments for the services to be made during the term of the contract; and (c) if the contract also provides for the supply of goods—the goods are directly related to the supply of the services.
(7) The single price is the minimum quantifiable consideration for the supply of the goods or services at the time of the representation, including each of the following amounts (if any) that is quantifiable at that time:
(a) a charge of any description payable to the person making the representation by another person (other than a charge that is payable at the option of the other person);
(b) the amount which reflects any tax, duty, fee, levy or charge imposed on the person making the representation in relation to the supply;
(c) any amount paid or payable by the person making the representation in relation to the supply with respect to any tax, duty, fee, levy or charge if:
(i) the amount is paid or payable under an agreement or arrangement made under a law of the Commonwealth, a State or a Territory; and
(ii) the tax, duty, fee, levy or charge would have otherwise been payable by another person in relation to the supply.
Example 1: A person advertises lounge suites for sale. Persons have the option of paying for fabric protection. The fabric protection charge does not form part of the single price because of the exception in paragraph (a).
Example 2: The GST may be an example of an amount covered by paragraph (b).
Example 3: The passenger movement charge imposed under the Passenger Movement Charge Act 1978 may be an example of an amount covered by paragraph (c). Under an arrangement under section 10 of the Passenger Movement Charge Collection Act 1978, airlines may pay an amount equal to the charge that would otherwise be payable by passengers departing Australia.
Section 48 (formerly TPA s. 53C) was introduced through the Trade Practices Revision Act 1986 (Cth). Paragraph 93 of the Explanatory memorandum to the Trade Practices Revision Bill (1986) outlines the aim of its inclusion:
The new s 53C (now ACL s. 48) prohibits a corporation (now “person”) advertising part only of the consideration payable for goods or services without disclosing the total consideration for which the goods or services may be purchased outright. This provision is directed at a trader advertising that a consumer may buy a product for a low deposit without disclosing the total price payable.
In ACCC v Virgin Mobile Australia Pty Ltd (No. 2),[11] action was taken against a business in the mobile phone industry for conduct that was said to be in breach of TPA s. 52, s. 53 and s. 53C (respectively, ACL ss. 18, 29 and 48). The violation of s. 53C (ACL s. 48) stemmed from the defendant’s failure “to state, in its advertisements, the cash price of the relevant mobile phone and/or the cash price, alternatively the minimum cost, of the Telephone and Service Package [in question] .”[12]
The Court in ACCC v Dell Computers Pty Ltd[13] gave s. 53C (ACL s. 48) an extraordinarily limited application. The dispute related to the defendant’s practice of not including a compulsory delivery charge in the price specified in its advertisement. Jacobson J concluded that the delivery charge was “a fee for services rather than a part of the consideration [i.e., the cash price] for the purchase of the goods”, and, thus, it fell outside the scope of s. 53C (ACL s. 48). While some comfort may be found in the fact that the ACCC was successful in relation to the claims based on the former TPA s. 52 (ACL s. 18), this is a very unfortunate decision, as buyers of the defendant’s computers could not reasonably avoid the delivery charge. The defendant’s computers were only sold by delivery, and one person phoning the defendant was informed that the delivery fee “could not be avoided unless he travelled to Malaysia to collect the computer”. Thus, from the buyers’ perspective it makes little sense to distinguish between the cost for the actual computer and the cost for obtaining it – both elements are essential for the buyer taking possession of the computer.
4.6.11 Referral selling
Australian Consumer Law, s. 49
A person must not, in trade or commerce, induce a consumer to acquire goods or services by representing that the consumer will, after the contract for the acquisition of the goods or services is made, receive a rebate, commission or other benefit in return for:
(a) giving the person the names of prospective customers; or
(b) otherwise assisting the person to supply goods or services to other consumers; if receipt of the rebate, commission or other benefit is contingent on an event occurring after that contract is made.
Note: A pecuniary penalty may be imposed for a contravention of this section.
ACCC v Giraffe World Australia Pty Ltd[14] is a classic case of referral selling in breach of ACL s. 49 (formerly TPA s. 57). In that case, people buying the respondent’s products had the option of joining a club through which the buyer would earn commissions by introducing others to the respondent’s products. Giraffe World conducted information seminars, called “Happiness Circles”, which promoted an “Ion Mat” as a health product. Persons could become members of the Giraffe Club only after attending a Happiness Circle seminar and buying an Ion Mat at a cost of $2900, plus a membership fee of $300 and a $50 registration fee. Persons attending the seminars were informed that only if they become members of the Giraffe Club could they apply to become members of the Grow Rich System.
Pyramid schemes, which share many characteristics with referral selling, are regulated separately in Division 3 of Chapter 3, Part 3-1 of the ACL.
- [2003] FMCA 358. ↵
- (1994) ATPR 41-306. ↵
- Trade Practices Commission v Calderton Corporation Pty Ltd (1994) ATPR 41-306, at 42-116. ↵
- (2004) ATPR 42-001. ↵
- (1989) ATPR 40-953. ↵
- (1980) ATPR 40-190. ↵
- (1983) ATPR 40-388. ↵
- Barton v Westpac Banking Corporation (1983) ATPR 40-388, at 44-564. ↵
- (2004) ATPR 42-041. ↵
- (1985) ATPR 40-604. ↵
- [2002] FCA 1548. ↵
- ACCC v Virgin Mobile Australia Pty Ltd (No. 2) [2002] FCA 1548, at para 16. ↵
- (2002) ATPR 41-878. ↵
- (1999) ATPR 41-718. ↵
