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Avoid making false claims about products or services

You must not make false or misleading claims about your goods or services.

This includes the characteristics of the goods or services, such as:

  • their price and usual value
  • the standard, quality or grade
  • their age and history
  • their country of origin
  • the composition (such as ingredients) and model
  • any accessories that you do or don’t include.

You also can’t mislead your customers about what the goods or services can do for them.

This includes:

  • how the goods or services work
  • what benefits they offer
  • how much the customer needs them (including whether they are legally required)
  • whether they are approved for use
  • whether repair facilities or spare parts are available
  • any guarantees, warranties or conditions that you make.

You must also be honest about:

  • testimonials
  • affiliations or approvals
  • sponsored endorsements.

Gifts, rebates and prizes

If you offer gifts, rebates or prizes, you must actually provide them. They must match their advertised description. False competitions are illegal.

Bait advertising

You must keep a reasonable supply of any sale items you advertise. If you sell out, you can’t talk customers into buying something similar that’s a higher price or lower quality.

Wrongfully accepting payment

You must never accept payment from a customer if you:

  • don’t intend to give the customer the goods or services
  • know you can’t offer the goods or services in a reasonable time or the time specified.

Was/now pricing

Businesses often make comparisons between product prices and the:

  • company's previous pricing
  • 'cost' or wholesale price
  • competitor's price
  • recommended retail price (RRP).

Was/now pricing, also known as ‘two-price advertising’ or ‘strike through’ pricing, is where a business advertises that a product was a certain price but is now on sale for a lower price.

If your business offers was/now pricing you must ensure that consumers are not misled about the savings that may be achieved. Saying that a product ‘was $100 now $50’ or ‘$100 $50’ can be misleading for consumers if that product had not been sold at $100 for a reasonable period directly before the sale commenced.

It can also be misleading if only a small amount of the product’s previous sales were at the higher price in the time directly before the sale began.

The maximum penalty for giving false or misleading information is $1.1 million for a corporation and $220,000 for an individual.

Cash back offers

Manufacturers may offer cash back because they are trying to increase sales or pass on discounts that wholesalers or retailers may not. But, businesses that use cash back offers must ensure that consumers are not misled about the benefits.

Saying that a consumer will receive cash back from a purchase when they actually receive a gift card is misleading or deceptive conduct.

It is also illegal for a business to offer rebates, gifts or prizes without intending to supply them, or not providing them as offered.

Other misleading conduct includes:

  • promoting the after cash back price as the main price instead of the actual price
  • not clearly outlining all conditions at time of purchase
  • not advising the number of claims to be accepted and the number left unclaimed at the time of purchase
  • replacing the advertised offer with a different offer.

It is recommended that, if you are offering cash back promotions, make sure the consumer is aware of all conditions that need to be met to receive the offer before they buy.

The maximum penalty for giving false or misleading information is $1.1 million for a corporation and $220,000 for an individual.