A soap powder manufacturer had marketed a product called ‘Sudso’ for many years. Its market share had fallen steadily due to increase competition. The manufacturer designed a bright new package for the product, added a scented fragrance and changed its name to ‘Sno’. The product was then re-released and advertised as ‘a new advance in laundry detergent that washes whiter than white’. Issue Has the soap manufacturer breached any laws? ‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive’: s 52.
To mislead or deceive means to lead into error. Therefore, misleading or deceptive conduct, whether in advertising or otherwise, will normally involve some form of misrepresentation. Depending on the circumstances the misrepresentation may be conveyed by words, graphical representations, pictorial images, action sequences, or even by silence. The representation may take the form of a statement of fact, an opinion or a prediction and may appear on a billboard, in a newspaper, on television or radio, on the Internet, on a label or on the product packaging.
To determine whether any particular advertisement is misleading or deceptive it is first necessary to have a clear idea of the conduct said to constitute the breach. It is then first necessary to apply a three steps approach: 1. Identify the relevant target audience; 2. Determine the message or impression being conveyed to the target audience; 3. Determine whether that message or impression is true or false. Step 1: What is the relevant target audience?
The target audience is those persons likely to be influenced by the conduct, not just the persons to whom the audience aimed the conduct. The target audience is often referred to as the relevant section of the public. Factors to be considered:- a) The nature of the product involved; b) The price of the product; c) The type of person who normally buys the product; AND d) The medium used to convey the relevant conduct. Step 2: What impression is being conveyed to the relevant target audience? The contents of an advertisement can mean different things to different people.
The target audience is likely to include a wide spectrum of personality types including the skeptical, the sophisticated, the ignorant etc. The issue is whether the relevant conduct should be judged against all members of the relevant audience or whether some persons should be excluded. Case to refer: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd – Gibbs CJ felt that conduct should be tested against those members of the relevant section of the public who take reasonable care of their own interests.
Mason J considered that conduct should be tested against ordinary members of the relevant target audience. It is still unclear which of these 2 approaches is the correct one. Case to refer: Deane and Fitzgerald JJ in Taco Co of Australia v Taco Bell Pty Ltd – a) To identify the relevant section of the public by reference to whom the question of whether conduct is, or likely is to be, misleading or deceptive falls to be tested; b) Once the relevant section is established, next, who come within it i. e. he intelligent and not so intelligent, well educated and the poorly educated etc; c) Evidence that some person has in fact formed an erroneous conclusion is admissible and may be persuasive BUT is not essential; d) Necessary to inquire why proven misconception has arisen (whether they are confused because of misleading conduct on the part of the respendent). Step 3: Is the impression true or false? Once it has been determined what the relevant conduct means to the relevant audience it is then a matter of assessing whether the message or impression conveyed to the relevant section of the public is true or false.
However, the advertiser must take care. Statement and opinions which the advertiser may regard as mere puffs or mere exaggerations might be regarded as misleading and deceptive by the courts. Case to refer: Budget Rent A Car System Pty Ltd v Dewhirst Facts: dispute between Hertz and Budget (2 large rental car agencies) – the Hertz Club Key card:- a) ‘While other car rental companies simply offer you discount, we offer you a CLUB KEY card. b) ‘The card puts you way ahead even before you start, because it works like no other card’. c) ‘The key to a wider range of vehicles’ Hertz card operated in the same way as the Budget card. Budget sought an injunction for misleading and deceptive conduct. Hertz argued that the comments were mere exaggerations not to be taken seriously by the public. Decision: David J held these statements should not be regarded as mere puffing as the statements were not accurate and they were likely to be misleading or deceptive.
Case to refer: Bateman v Slatyer – Burchett J set out the circumstances in which an opinion may be misleading and deceptive: It is of course clear law that a statement of opinion cannot be regarded as false or misleading, or as misleading and deceptive, simply because it turns out to be incorrect, but such an opinion may convey that there is a basis for it, that is honestly held upon rational grounds involving an application of the relevant expertise. Case to refer: Tabacco Institute v AFCO. Facts: The Tabacco Institute took out certain prominent newspaper advertisement denying that passive smoking had any injurious effects. In part the advertisement read: And yet there is little evidence and none which proves scientifically that cigarette smoke causes disease in non-smokers. The Tobacco Institute argued that it was merely the writer’s opinion that there was little or no scientific evidence linking cigarette smoke and disease in non-smokers.
Decision: Some sections of the public who might be influenced by the advertisement would, not unreasonably, believe that the advertisement was a factual statement to the effect that little or no such scientific evidence existed. On balance this was false as overwhelming evidence to this effect did exist. The scientific evidence linking cigarette smoke and disease in non-smokers could not be described as ‘little’. The court decided that the advertisement was misleading or deceptive. Besides, Criminal misrepresentation under s75AZC. Section 75AZC provides that a corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, make a false representation about the matters which are listed in subsection 75AZC(1)(a)-75AZC(1)(k). Thus, a representation means whatever ordinary or reasonable members of the relevant section of the public think it means. If the message is false, then the representation is a misrepresentation.
Section 75AZC(1)(a) – Standard, quality, value or grade, consumption, style or model, particular history or particular previous use of goods. ‘Quality’ refers to an ‘attribute, property, special feature. The nature, kind or quality’ or advertising that a ‘Hi-Frequency Electronic Repeller’ repels insects when there is no repellent effect at all are false representations as to the quality of the products in question. Section 75AZC(1)(c) – prohibits false representation that goods are new. ‘New’ is an ambiguous expression, and its meaning in any particular case will depend on the relevant section of the public. New’ can mean ‘novelty’ or ‘invention’ in the sense of promoting a new washing powder as possessing a ‘new and improved’ formula. If in fact the washing powder has not been materially changed, but rather has simply been put in a new package, an offence will have been committed. Conclusion The soap manufacturer breached s 52, s 75AZC, s 75AZC(1)(a), and s 75AZC(1)(c). ‘A new advance in laundry detergent that washes whiter than white’, these statement should not be regarded as mere puffing as the statements were not accurate and they are likely to be misleading and deceptive.
Moreover, a corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, make a false representation about the matters which are listed in s 75AZC(1)(a) and s 75AZC(1)(c). The words ‘new advance’ when used in advertising can have a magnetic effect and accordingly can easily mislead where it is not used accurately. Advertiser must be careful to qualify the use of the word when in fact ‘Sno’ advertisement was likely to be understood as new and improved formula under s 75AZC(1)(c).