Lawthentic Loop

Stay updated, stay in the loop

Lawthentic Loop

Stay updated, stay in the loop

Australia’s consumer watchdog, the ACCC has not been shy in cracking down on alleged false or misleading representations. Airbnb, Tiger Mist, Uber and Honda are examples of organisations that have recently come under fire.

ACCC cracks down on alleged misleading representations under the Australian Consumer Law

Author: Ersel Akpinar, Principal Lawyer

8 June 2022

Australia’s consumer watchdog, the ACCC has not been shy in cracking down on alleged false or misleading representations. Airbnb, Tiger Mist, Uber and Honda are examples of organisations that have recently come under fire.

The Australian Competition and Consumer Commission (ACCC) continues to take action over alleged false or misleading representations under the Australian Consumer Law (ACL).

So far this year, Australia’s consumer watchdog has alleged a slew of businesses, from an assortment of industries, have misled consumers about a variety of issues.

Some recent cases of organisations that have come under fire by the ACCC include:

  • Airbnb for allegedly misleading consumers about accommodation prices;
  • Tiger Mist for allegedly misleading consumers about consumer guarantee return rights;
  • Uber which admitted to misleading consumers about fares and cancellation fees; and
  • Honda for allegedly misleading consumers about servicing option.

Recently, Samsung Australia has also admitted to false or misleading representations about phone water resistance in its advertising. Read more in our article In hot water – misleading claims in advertising attracts hefty penalty under the ACL.

It’s therefore imperative for businesses to understand their obligations and ensure compliance with the ACL.

This article will:

  • Firstly, provide a brief overview of the ACL;
  • Secondly, explain what false or misleading representations are;
  • Thirdly, look at some recent case studies where the ACCC has acted over alleged false or misleading representations, including Airbnb, Tiger Mist, Uber and Honda; and
  • Finally, sum up with the key takeaways.

A brief overview of the ACL

The ACL, found in the Competition and Consumer Act 2010 (Cth) is aimed to promote competition and fair trading and to offer consumers with protection.

The ACL:

  • Provides general standards of business conduct;
  • It also disallows unfair trading practices;
  • Further, it regulates particular types of business-to-consumer transactions;
  • Additionally, it comprises consumer guarantees for goods and services; and
  • It regulates the safety of consumer products and services related to products.

One of the ACL’s fundamental provisions prohibits a business from making false or misleading representations. Further, making false or misleading representations constitutes unfair business practices and is a serious offence, for which there are hefty penalties.

What are false or misleading representations?

False or misleading representations are unlawful under the ACL. Particularly, section 29 of the ACL states that a business must not make false or misleading representations about goods or services when supplying, offering to supply, or promoting those goods or services.

It should be noted that the ACL stipulates a business must not make false or misleading representations in relation to:

  • The standard, quality, value or grade of goods or services;
  • The composition, style, model, history or prior use of goods;
  • That goods are new;
  • That a particular person has agreed to acquire goods or services;
  • Testimonials by any person relating to goods or services;
  • The sponsorship, approval, performance characteristics, accessories, uses or benefits of goods or services;
  • The price of goods or services;
  • The availability of facilities for repair of goods or of spare parts for goods;
  • The place of origin of goods;
  • The consumer’s need for goods or services;
  • Any condition, warranty, guarantee, right or remedy on the goods or services; and
  • The requirement to pay for any condition, warranty or guarantee on the goods or services.

Importantly, whether a business makes a false or misleading representation depends on the circumstances of each specific case.

Recent case studies where the ACCC has acted over alleged false or misleading representations

Australia’s consumer watchdog, the ACCC has not been shy in cracking down on alleged false or misleading representations. Airbnb, Tiger Mist, Uber and Honda are examples of organisations that have recently come under fire.

 Airbnb allegedly misled consumers about accommodation prices

The ACCC announced it commenced Federal Court proceedings against Airbnb in the Media Release on 8 June 2022.

The ACCC alleged Airbnb made false or misleading representations between January 2018 and August 2021. These representations were made to thousands of Australian consumers. It involved displaying prices for Australian accommodation on the Airbnb website or mobile app using a dollar sign ($) only. It was not made clear that those prices were in US dollars.

In addition, the ACCC alleged Airbnb’s conduct was misleading or deceptive when it falsely told consumers who complained about being charged a higher price, that the user chose to display the price in US dollars on its booking platform.

The ACCC sought declarations, injunctions, pecuniary penalties, orders for compensation of affected consumers, costs and other orders.

Tiger Mist allegedly misled consumers about consumer guarantee return rights

Tiger Mist, an international online fashion label and retailer based in Melbourne, paid $26,640 in penalties. Allegedly, Tiger Mist misled consumers about their consumer guarantee right to return faulty items.

Tiger Mist was issued with two infringement notices by the ACCC for statements made on its website on 21 February 2022. The ACCC said the Returns page of the retailer’s website stated consumers could:

  • Only return a faulty product by contacting Tiger Mist within 30 days of receiving their order; and
  • That the item had to be returned in its original packaging.

In the Media Release on 13 May 2022, ACCC Commissioner, Liza Carver said:

Under the Australian Consumer Law, a consumer’s right to a remedy for a faulty product is not limited to a specific time period, and consumers do not need to return the faulty product in its original packaging to obtain a refund, replacement or repair.

Tiger Mist promotes its products via social media platforms such as Instagram and is primarily targeted at younger consumers. The ACCC was concerned Tiger Mist made representations that may have misled these consumers into thinking they could not return a faulty product. Following these concerns, Tiger Mist has removed the statements from its website.

Consequently, it is essential Australian businesses ensure their refund and returns policy does not misrepresent the consumer guarantee rights under the ACL. This is irrespective of whether products are sold in a physical or e-commerce store. Learn more about consumer guarantees in our article Consumer guarantees: what, who, how?

Uber admitted it misled consumers about fares and cancellation fees

The ACCC commenced proceedings in the Federal Court against Uber. The rideshare corporation admitted to making false or misleading representations in Uber Taxi fare estimates and cancellation warning messages in the Uber rideshare app.

In the Media Release on 26 April 2022, ACCC Chair Gina Cass-Gottlieb stated:

Digital platforms like Uber need to take adequate measures to monitor the accuracy of their algorithms and the accuracy of statements they make, which may affect what service consumers choose. This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour.

The ACCC and Uber agreed to jointly seek orders from the Court including declarations that Uber breached the ACL, and for Uber to pay penalties totalling $26 million.

Honda allegedly misled consumers about servicing options

The ACCC commenced Federal Court proceedings against Honda.

It was alleged by the ACCC that Honda made false or misleading representations between January and June 2021 about two former authorised Honda dealerships, Astoria and Tynan. Honda allegedly represented to consumers that these dealerships would close or had closed and would no longer service Honda vehicles. Honda directed customers to book their next service by contacting a Honda Service Centre or Honda dealership.

The two dealerships in fact had not closed, but were no longer Honda franchisees, and continued to trade independently and service vehicles, including Honda vehicles.

In the Media Release on 13 April 2022, ACCC Commissioner Liza Carver said:

We allege Honda deprived customers of the opportunity to make an informed choice about options for servicing their car in favour of a Honda-linked dealership which may have been less convenient or more costly for them…We also allege Honda caused harm to the Astoria and Tynan businesses, by falsely claiming they had closed or would close, which may have led customers to have their Honda vehicles serviced elsewhere.

The ACCC sought declarations, pecuniary penalties and costs.

The key takeaways

To sum up, the key takeaways are:

  • It is a breach of the ACL for a business to make false or misleading representations about goods or services when supplying, offering to supply or promoting those goods or services;
  • Accordingly, there are substantial penalties;
  • Whether a representation is false or misleading depends on the circumstances of each specific case;
  • Australia’s consumer watchdog, the ACCC has not been shy in taking action against organisations for allegedly making false or misleading representations, hence there is no shortage of recent cases; and
  • Finally, it is vital for all Australian businesses to understand their obligations under the ACL and to review and update their practices to ensure compliance.

The Australian Consumer Law is undoubtedly technical and prescriptive. For more information or if you have any questions, get in touch with the Lawthentic team.

About Lawthentic | Commercial Lawyers

Based in Sydney, Lawthentic provides high-level, specialist, commercial and corporate legal advice to business Australia-wide and across APAC. We deliver progressive end-to-end commercial law services that address the full spectrum of legal issues a business may encounter, driving “Real Progress for Enterprise”. Our legal services cover all areas of Commercial law, Corporate law, Intellectual Property law, Data and Technology law, Regulatory Compliance, and Dispute Resolution. We work with medium to large corporate businesses looking for friendlier and more cost-efficient legal services without compromising on expertise. We provide in-house, face-to-face, or remote support from our offices in Sydney.

About the Author

Ersel Akpinar, Principal Lawyer

Ersel is a Principal Lawyer, Founder and the Director of Lawthentic. He is a commercial lawyer with over 20 years’ experience working with a wide range of businesses in Australia and across the Asia Pacific region. Having started his career at top-tier US and Australian law firms, he is an accomplished, specialist and progressive legal advisor who is uncompromisingly dedicated to his clients. As a business enabler, a critical thinker and an interpreter of the law, Ersel believes in helping business to do business. Read more about Ersel >

Get in touch

    Archive

    Archive