But I didn’t intend for my promotion to be misleading

Knowing your audience is critical when developing your marketing messages. Consider the knowledge levels of an investor purchasing his fifth property vs a first home buyer who isn’t familiar with the building process at all. The savvier your audience, the more likely they are to really understand what you are saying in your advertisements. Whilst this creates some generalisations, it is something that you must be aware of when you are contemplating your marketing collateral.

The complexity of marketing is further compounded by the Australian Consumer Law (often referred to as the ACL) which establishes important rules around misleading and deceptive conduct, unconscionable conduct and fair dealings with consumers. The ACL is enforced by the Australian Competition and Consumer Commission (ACCC) and the relevant State or Territory fair trading office, in Victoria that is Consumer Affairs Victoria (CAV).  A breach of the ACL can see substantial fines, for example, $500,000 per contravention for individuals and for corporations the fine is the greater of $10m per contravention or three times the benefit obtained from the offence (or if the benefit cannot be determined, 10% of the annual turnover of the corporation).

Whilst marketing rules really need to be explored on a case-by-case basis depending on the promotion, business operations and the target audience, there are some general rules that will apply in all cases.

Misleading and deceptive

To determine if the marketing collateral is misleading and deceptive, one must look at the entire message of the campaign and not just an individual sentence in isolation. What is the dominant message it creates and is it likely to lead the ‘target audience’ into error about the true situation? For this test, it is not what you intended the message to be or whether you intended to mislead. It is an objective test (not a subjective test) that depends on the effect the conduct is likely to have had on ordinary or reasonable members of a particular class and whether the members of that class would have been misled or deceived or are likely to have been misled or deceived.

Consider this example. A builder advertises a turnkey package targeted at the first home buyer market. They deduct the first home owner’s grant from the price and then add a promotional message which says, “FREE upgrades worth $50K”. Buried down in the disclaimer you discover the price has been reduced by $20k for the First Home Owners Grant (regional), reduced again by $25k for the Government’s HomeBuilder Grant, and to receive the upgrades you have to pay $5K. This would be misleading and deceptive conduct, as the message of the reduced price with the words “FREE” does not accurately reflect the true position?.

Can silence lead to misleading and deceptive conduct?

In short, the answer is yes, but it does depend on the context of each case. If you do not correct a misunderstanding a consumer may have then yes, silence may be found to be misleading and deceptive conduct. An example of this may be that a regional customer pays a deposit believing they are entitled to a promotion and the sales consultant does not advise them that they may not be eligible for the promotion as the regional area may be outside the builder’s building zone for the promotion.

Does your image match your message?

If you are advertising a fixed price house and land package, then the image used must be of the home the consumer can expect to receive for that fixed price.  You cannot put a photo of an upgraded façade which has render and fancy external lights and flat roof tiles if the standard fixed house price does not include those features. Whilst you may have a general disclaimer to clarify items in an image (for example, landscaping and driveway not included) the disclaimer must be prominently displayed right next to the picture not buried on page 10 of a glossy brochure. Also, a disclaimer will not absolve you from using a misleading image if you could have easily corrected the image.

A further common issue with disclaimers is when the disclaimer is so small it is illegible (and is quite often in white which is sometimes difficult to read).  An example is a large billboard on a freeway with an advertisement showing an upgraded home with the hero message “FOR A LIMITED TIME PAY ONLY $250k FOR YOUR FIRST HOME”. Then in fine print on the bottom of the billboard is a disclaimer which alerts the consumer that this price is for first home buyers, the image is for illustrative purposes and they must leave a deposit this weekend.  A driver driving 100km/hr on a freeway has no possibility of reading a disclaimer in small print as he drives past the billboard.

Rule of thumb: the fine print can never change the dominant purpose of the message/overall impression created.

Is it really a true saving?

This is always difficult in the housing industry as many would say that no two houses are alike, so how do you compare like for like.  Or further, if a builder always offers a promotion of some sort, whether its extra inclusions, a discounted price, or a showroom voucher, how do you determine the true retail value of the home?

Care must be taken when you use the words “Saving”, “Discount”, “Free”, “Special” and “Limited Time” as these create strong messages for consumers. If you use these words, you must have a good long think about whether in fact the message is true. That is, right before your promotion, what did the consumer need to pay (or what product did they receive) and then consider if it is a true and fair representation you are creating.

Another example is if you were to insert the word “NOW” right before a price on your house and land package brochure. This implies that there was a “BEFORE” price which was higher, so the consumer believes they are better off with the NOW price. Similarly, if you were to use the word “EXTRA”, this creates the expectation in the consumer’s mind that what they purchase today is more than they would have received if they purchased the home yesterday or last week. So, you must carefully check that the representation created is in fact true.

It is important that the message in relation to the offer is accurate, otherwise it may be considered ‘bait advertising’, which is prohibited. Bait advertising is the advertising of a specific product or for a particular price which is not truly available, but it is marketed to ‘get the customer through the door’.  If you do have a promotion for a limited time or in limited quantities, then this must be clearly stated on the advertisement, and again, it must be true. You cannot say it is for a ‘limited time’ to get the consumer through the door, to then still be running the promotion 6 months later.

Unconscionable conduct

Finally, you also need to ensure that in getting the sale there is no unconscionable conduct which prevents fair dealings with the consumer. This may include extremely high-pressure sales tactics, and/or taking advantage of the vulnerability of a consumer. Again, this will be determined on a case by case test, but the Competition and Consumer Act (sections 20 to 22) prohibits unconscionable conduct in connection with goods and services.

So, a final checklist:

  • Is the dominant message correct for all buyers (if not then that needs to be clearly disclosed in the message and not buried in a disclaimer)
  • Is the dominant message correct for all your ranges of homes (if not then that needs to be clearly disclosed in the message and not buried in a disclaimer)
  • Is there a start and end date which is clearly identified?
  • Are the exclusions clearly noted?
  • Is the fine print easily found and easy to read?
  • Does the fine print change the dominant message?

 Chat to us if you’d like further guidance on how to safely market your business.

 

 

 

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