Impressions count when it comes to misleading consumers
By Professor Stephen King
Christmas is coming, which means consumers are out looking for great deals to fill stockings and feed the family. And for retailers and manufacturers, the temptation to add “spin” to their marketing is high. However, these businesses must be careful not to step over the legal line when trying to boost their sales.
Under Australia’s competition and consumer laws, a business must not engage in conduct that is misleading or deceptive, or that is likely to mislead or deceive.
Of course, the devil is in the detail. When does marketing hype turn into illegal behaviour?
A current matter before the courts provides a good example of the issues. The Australian Competition and Consumer Commission (ACCC) is taking legal action against a number of poultry companies.
At the heart of this matter is the term “free to roam”. Specifically, have the poultry producers engaged in misleading and deceptive conduct by claiming that their chickens have been raised in barns where they are “free to roam”, despite those chickens each having only about 500 square centimetres of space?
However, these experts miss the point. The law does not simply highlight claims that are incorrect from a scientific perspective. Rather, the law considers if the claims made by a producer are likely to mislead or deceive consumers.
There may be an arguable case that 500 square centimetres per chicken in a large shed is physically sufficient to allow chickens to “roam”. But the court needs to ask whether, from the consumers’ perspective, such a limited physical space is consistent with the claim that the chickens have been bred in conditions where they are “free to roam”. Have the producers engaged in conduct likely to mislead or deceive consumers, despite any potential scientific argument?
As an analogy, consider a city railway station at rush hour. Commuters may be tightly packed but they are still able to move around the platform, albeit with some pushing and shoving. To most consumers, I doubt that this situation would be described as one where they could “roam” the platform. The word “roam” creates an image of open space and freedom, which presumably is the reason why the word was used in the chicken producers’ marketing campaign. This – not scientific issues of animal welfare – is the reason why those producers are now in court.
The issue is clear in the ACCC’s press release. It says, “The ACCC alleges that the Federation has engaged in misleading and deceptive conduct and made misleading representations that meat chickens are raised in barns in which meat chickens have substantial space available allowing them to roam around freely.”
In recent years, other marketing claims have come under similar scrutiny. For example, the ACCC provides guidance on its website about claims that produce is “organic”. As this document notes, “[a] blanket claim that a product is organic is likely to mislead consumers if the product is only partly made of organic ingredients”.
Misleading claims about ingredients can be broader. If a manufacturer represents that a particular ingredient is the major or only ingredient in a product, when it is actually a minor ingredient, then this can illegally mislead consumers.
Nudie Foods Australia found this out in the Federal Court. It sold juice that, according to the court, was represented as pure cranberry juice, even though it was 80% apple juice. The scientific fact, that many consumers would find pure, undiluted and unsweetened cranberry juice undrinkable, did not make the claims about the juice legal.
Of course, misleading and deceptive claims can be made about other products, or even about the way products are sold. There have been a number of cases involving retailers who have advertised that a product “was” a certain high price, but is “now” being sold at a lower price, even though the product has never, or has not recently, been sold at the higher price.
The courts have found such conduct to be misleading. Importantly, the courts have made it clear that it is the impression created by such advertising to a reasonable consumer that is the key to the conduct. See, for example, here.
Even if the product was sold at the higher price in the past, the juxtaposition of “was/now” in advertising can create an impression that the higher price was in the immediate past. If this is not true, then the advertising can be illegal.
The courts have recognised that consumers can separate out advertising “puffery” from serious claims. So when using a particular product is advertised with the consumer sprouting wings or flying backwards over the city, this is unlikely to be illegal. Stupid perhaps, but not illegal!
The key to firms avoiding misleading and deceptive conduct is to consider the impression that is created in the mind of a reasonable consumer. If that impression is inconsistent with the facts, then the business may be breaking our consumer protection laws.
Professor Stephen King is the Dean of the Faculty of Business and Economics at Monash University.
This article has previously appeared in The Conversation.