18 May 2022Australian Consumer Law is designed to protect a degree of truth in advertising, so businesses need to be aware of the limits to which they can go in promoting their brand and pushing sales.
In a Federal Court judgement in 2020, an eyewear retailer was fined $3.5 million for misleading and deceptive conduct. It was found it had made false or misleading representations to customers about how each purchase activated a contribution to charity by the company.
The retailer, Oscar Wylee, admitted in court that between January 2014 and December 2018 it made statements in its social media posts, emails, website and promotional material that for each pair of glasses a customer bought, the company donated another pair of glasses to “someone in need”.
False claims and misleading advertising land company in court
Oscar Wylee failed to carry out its advertised promise to donate a pair of glasses to the needy for every pair sold under its “Buy a pair, give a pair” slogan.
The ACCC took Oscar Wylee to the Federal Court, where the company conceded that over those five years it had sold 328,000 pairs of glasses, but had donated only 3,181 frames – without lenses – to charity. It was also found to have made misleading claims regarding an affiliation with a charity. (See Oscar Wylee penalised $3.5m for ‘buy a pair, give a pair’ charity claims, ACCC, September 2020.)
Is there truth in advertising?
Any business that is making promises or claims in its promotional material needs to be aware of the strength of Australia’s consumer laws and the powers the ACCC has to pursue what it sees as breaches of truth in advertising.
Section 18(1) of the Competition and Consumer Act 2010 – Schedule 2 states that a “person” (which can also mean a company) must not, in trade or commerce, “engage in conduct that is misleading or deceptive, or is likely to mislead or deceive”.
Businesses cannot afford to make false or misleading marketing claims
The $3.5 million fine included $1.4 million for breaching section 29(1)(h) of the Competition and Consumer Act, relating to falsely claiming the company had a “sponsorship, approval, or affiliation” with a charity. The remaining $2.1 million fine was for breaching section 33, relating to misleading the public.
In her ruling the judge said the company had appealed to socially conscious customers and “its conduct was a betrayal of that promise”. (See Australian Competition and Consumer Commission v Oscar Wylee Pty Ltd [2020] FCA 1340.)
Probably even worse for the company was the bad publicity that came with the court judgement, as both the ABC News and News Ltd reported on the story.
Seek legal advice before launching your next campaign
This case demonstrates the importance of getting expert legal advice before embarking on a marketing campaign such as this, along with the necessity of knowing the powers of consumer law.
After the judgment the company acknowledged the importance of the matters raised by the ACCC and said it “sincerely regrets” its contraventions of the law.
Oscar Wylee has now appointed a compliance officer responsible for ensuring the company complies with consumer law and has increased its donations of free spectacle frames to charity, hospitals and prisons.
For more information please see Failure to specify currency can be deceptive conduct and a $15 million fine.
