If an advertisement promoting closed-end credit for real estate contains any of the following trigger terms, the three specific disclosures listed at the bottom of this page must also be included in the advertisement. The triggering terms are: Show 1. The amount of the down payment, expressed either as a percentage or as a dollar amount. EXAMPLES: "10% down" "25% down" "90% financing" 2. The amount of any payment expressed either as a percentage or as a dollar amount. EXAMPLES: "Monthly payments less than $67" "Pay 5% each month" "$9 per month" 3. The number of payments. EXAMPLES: "36 small payments are all you make" "48 monthly payments and you're paid up" 4. The period of repayment (the total time required to repay). EXAMPLES: "Five years to pay" "36 months to pay" "4 year loans available" 5. The amount of any finance charge. EXAMPLES: "Financing costs less than $100" "Less than $100 interest" "$100 financing" The following are examples which do not trigger the required disclosures: "No down payment" "18% Annual Percentage Rate" "Rate loans available here" "Easy monthly payments" "Loans available at 5% below our standard annual percentage rate" "Low down payment accepted" "Pay weekly" "Terms to fit your budget" "Financing available" Required Disclosures If any triggering term is used in a closed-end credit advertisement, then the following three disclosures must also be included in that advertisement: 1. The amount or percentage of the down payment; 2. The terms of repayment; and 3. The "annual percentage rate,"using that term spelled out in full. If the annual percentage rate may be increased after consummation of credit transaction, that fact must be disclosed.
There are laws in place to protect you from being misled about the products and services you buy. Businesses are not allowed to make statements that are incorrect or likely to create a false impression. This rule applies to their advertising, their product packaging, and any information provided to you by their staff or online shopping services. It also applies to any statements made by businesses in the media or online, such as testimonials on their websites or social media pages. For example, businesses cannot make false claims about: It makes no difference whether the business intended to mislead you or not. If the overall impression left by a business's advertisement, promotion, quotation, statement or other representation creates a misleading impression in your mind—such as to the price, value or the quality of any goods and services—then the behaviour is likely to breach the law. There is one exception to this rule. Sometimes businesses may use wildly exaggerated or vague claims about a product or service that no one could possibly treat seriously or find misleading. For example, a restaurant claims they have the 'best steaks on earth'. These types of claims are known as ‘puffery’ and are not considered misleading. Some examples of business behaviour that might be misleading are:
These are some of the most common types of false or misleading advertising reported to the ACCC. Fine print and qualificationsIt is common practice for advertisements to include some information in fine print. This information must not contradict the overall message of the advertisement. For example, if an advertisement states that a product is 'free' but the fine print indicates some payment must be made, the advertisement is likely to be misleading. Another example is if an advertisement states that a discount promotion is 'storewide' or 'X% off all products' but the fine print includes that a significant number of products or brands are excluded from the sale, then this would also likely to be misleading. Comparative advertisingSome advertisements or sales material may compare products or services to others on the market. These comparisons may relate to factors such as price, quality, range or volume. Comparative advertising can be misleading if the comparison is inaccurate or does not appropriately compare products. Bait advertisingBait advertising takes place when an advertisement promotes certain (usually 'sale') prices on products that are not available or available only in very limited quantities. It is not misleading if the business is upfront in a highly visible, clear and specific manner about the particular product 'on sale' being in short supply or on sale for a limited time. Environmental ('green') claimsEnvironmental claims may appear on small household products such as nappies, toilet paper, cleaners and detergents through to major white goods and appliances. They may include statements about environmental sustainability, recycling, energy and water efficiency or impact on animals and the natural environment, for example 'green', 'environmentally safe' or 'fully recycled'. Businesses making these claims must be able to substantiate them.
Make a consumer complaint Country of origin It is illegal for a business to engage in conduct that misleads or deceives or is likely to mislead or deceive consumers or other businesses. This law applies even if you did not intend to mislead or deceive anyone or no one has suffered any loss or damage as a result of your conduct. Related information: False or misleading claims ImpressionsIt is important to look at how the behaviour of the business affects the audience’s impression of a good or service. When deciding if conduct is misleading or deceptive, or likely to mislead or deceive, the most important question to ask is whether the overall impression created by your conduct is false or inaccurate. While a business is not required to disclose information in all circumstances, there will be situations where a business must provide information to avoid engaging in misleading or deceptive conduct. You should disclose additional information to your customer or another business where it is likely that your other conduct has created a misleading impression, or where it is reasonable to expect that this information will be disclosed.
Example: A customer is deciding whether to buy a new photo printing device and seeks advice from the electronic section of a department store. The customer mentions the brand of computer they have and buys the photo printing device on the advice of the retailer. However, the device is not compatible with the customer’s computer. The retail assistant knew it was not compatible yet did not advise the customer about this. His conduct might be considered misleading by silence or omission as he did not disclose information that would have significantly changed the customer’s mind about buying the product.
Real case study: An internet company offered ‘unlimited’ download plans for users who signed up to their services. However, the plans were subject to major limitations including speed reductions when a certain amount of data was downloaded. The court found that the use of the term ‘unlimited’ in relation to plans that were subject to major limitations that were not disclosed was misleading and deceptive. Case law: Full Federal Court - [2012] FCAFC 20 ‘Free’Businesses should be particularly careful of the use of the word ‘free’. The idea of getting goods or services without charge can create keen interest in consumers. Consumers will usually think of ‘free’ as absolutely free - a justifiable expectation. Simply put, businesses may get into trouble with free offers if they do not reveal the complete truth, including any conditions that the consumer must comply with.
Example: A business uses the phrase ’10 per cent free’ – meaning the price to the consumer is the same but they receive an additional ‘free’ volume of the product. If the price of the product has been increased this could be misleading, because the additional volume is not actually free. Example: A business makes a ‘buy one, get one free’ offer, but raises the price of the first item to largely cover the cost of the second (free) item. This is likely to be misleading or deceptive. The circumstancesWhether conduct is misleading or deceptive will depend on the factors surrounding the conduct. This means that all relevant circumstances will be taken into consideration, such as the entire advertisement, product label or statements made by a sales representative. Fine print, contradictory statements and images that obscure or alter written statements are all taken into account. Know your audienceWhether any marketing and promotional activities are misleading or deceptive may depend on the audience that receives the message. Businesses must remember that the consumers an advertising campaign targets may be very different to the audience that actually receives the message. You should identify your potential audience as this will help you determine the impact of your message. For example, television or radio advertisements are likely to have a wider reach than claims made by your sales staff. PufferyPuffery is a term used to describe wildly exaggerated, fanciful or vague claims about a good or service that no one could possibly treat seriously or find misleading. These statements are not considered misleading or deceptive under the ACL.
Example: A restaurant claims it has the ‘best steaks on earth’ and the ‘tastiest food in town’. The restaurant’s claims can be considered puffery as they are unlikely to mislead customers. |
Which of the following, when included in an advertisement, is least likely to violate the law?
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