Consumer protections against deceptive and misleading advertisements by Australian Telcos
Consumers are constantly victims of deceptive and misleading advertisements. It’s not a new concept, with corporations having long used fraudulent and exaggerated claims, or puffery, to promote their products. So, what's in place within Australia, to protect buyers and hold dodgy sellers accountable?
Before we dive into specifics, it’s important that we understand the basics of consumer protections in Australia...
Consumer protections ensure that buyers can make safe purchases without being tricked, scammed or misled. These protections provide benefits for consumers and ensure fair competition between businesses. Australia has a variety of safeguards and services in place to protect consumers from deceptive and misleading practices. All Aussie businesses are governed by the Australian Consumer Law (ACL). The ACL is the Commonwealth / National Government Law in place to protect buyers. Section 18 (1) of the ACL states that "a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive." The Australian Competition and Consumer Commission, or ACCC, is an independent government organisation that co-enforces the ACL with state and territory consumer protection agencies, such as NSW Fair Trading and Access Canberra. These state-level agencies provide consumers with knowledge about their rights and options if they find themselves victims of advertising misconduct. State agencies can also assist with negotiating a suitable resolution, acting as an intermediary between buyer and business. The ACCC defines deceptive and misleading conduct as when a "business makes claims or representations that are likely to create a false impression in consumer's (minds) as to price, value or quality".
Publishing deceptive or misleading advertisements is illegal and can result in monetary fines and advertising bans. In Australia, the advertising and marketing industry is self-regulated, and publishers are expected to adhere to the Code of Ethics set out by the Australian Association of National Advertisers (AANA). Section 1.2 prohibits deceptive and misleading content. Advertising complaints organisation, Ad Standards, governs the AANA code and is independent of the government and funded by a levy. Responsible businesses make contributions when publishing ads. This is successful, as benefits for both companies and consumers are available. Protecting businesses from unfair competition as well as consumers with transactions.
Focusing on the Australian Telecommunications industry, as they have been under the spotlight over the past decade, for deceptive and misleading advertisement content, accruing constant media coverage. (You may have heard of a case or two on the news). The Australian Communications and Media Authority (ACMA) governs the Telecommunications industry in Australia and acts as another safeguard in protecting consumers from deceptive advertisements. Enforcing the AANA code on broadcast media outlets such as TV and Radio. ACMA, Ad Standards, the ACCC and state-level agencies collaborate to monitor and respond to breaches of advertisement misconduct within Australia. Ensuring consumers are safe and protected during and after purchases.
In 2010, one of Australia's largest telecommunications service providers, Optus, was under fire in the case of Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 (Oct 29 2010) for publishing the promotional campaigns "Think Bigger" and "Supersonic". Promoted via television ads, metro and local newspapers, billboards and online and email marketing, which allegedly misled consumers. The campaign offered "unlimited" data broadband plans but positioned critical information in fine print on the promotional content. Upon inspecting the fine print, it noted that only the first 40 Gb of data was usable at full speeds; upon using all the 40 Gb, the service would be throttled, slowing down to an "unworkable or significantly impaired" 256kbps speed limit. Making simple tasks, like watching YouTube, an issue. This campaign was flagged by the ACCC and investigated in federal court. Optus was found to be in breach of the Trade Practices Act 1974 (Cth), (now reformed as the Competition and Consumer Act 2010 (Cth) on Jan 1, 2011). Claiming the advertisement content to be "misleading and tricky", and as a result, the court ordered Optus to pay a $3.6 million penalty and was also banned from posting similar advertising content for 3 years. (Penalty was initially $5.6m, but Optus successfully appealed due to a judging error. Additionally, dismissing the 3-year ban). Optus was also ordered to notify all customers impacted by this misconduct and allow them to terminate their contracts without penalty.
This case is a prime example of the outcomes of publishing misleading and deceptive advertisements. Both the ACCC and customers have a low tolerance for such conduct and will report misconduct. Brands that catch the attention of the ACCC can expect severe punishments to apply. For corporate bodies, max penalties of $10 million, or three times the value of benefits received or 10% of the annual turnover in the preceding year.
In 2012, the Telecommunications Consumer Protections (TCP) Code was announced. With rules coming into force in September 2013. The TCP Code is enforced and maintained by the ACMA. The ACCC supports the industry-specific framework set out in the TCP Code. The code was developed to better recognise the complexity of the constant expansion and evolution within the telecommunications market. Proving telcos like Optus with a scaffold of regularly updated rules and regulations, ensuring better consumer protections by holding brands in this space more accountable. Since the ACCC v Optus verdict, it has been noted that "very substantial penalties have become commonplace, with multi-million-dollar penalties being awarded on several occasions. Most of the high-end penalties including Harvey Norman and Apple," said Dr Alexandra Merrett, an in-house lawyer for the ACCC. Chairman for the ACCC at the time, Graeme Samuel, also stated that "Telecommunications providers should think very carefully before claiming that their service offerings are unlimited. If there are any limitations, then they run the risk that the advertisements are misleading and that they will receive unwanted attention from the ACCC". The TCP Code now also restrains the use of certain words such as 'unlimited'. It's unclear if the earlier proceedings between the ACCC and Optus sparked the development of the TCP code. - However, it should be recognised that the case was settled months before.
Deceptive and misleading advertising conduct is not at all uncommon in Australia. To combat this, there are various laws such as ACL, bodies such as ACCC and ACMA and agencies like Fair Trading NSW here to hold businesses responsible and help consumers seek justice. The case of ACCC vs Optus and its verdict is a rich example that such conduct will not be tolerated, and punishments apply. Changes are constantly being made to ensure that the rules reflect the rapid pace of technology innovations within the Telecommunications sector through the TCP Code, protecting Australian consumers and limiting loopholes and grey areas for media professionals, such as marketers.