Stay in touch with how the law affects you! Subscribe to our
Tired of unpredictable fees from ad hoc legal services?
Don't be too smart in overstating or understating facts in your advertising
Consumer Law News | March 2012
Make sure your important disclaimers aren't hidden from view of your customers
A recent Federal Court decision in ACCC v Singtel Optus Pty Ltd (No 4) [2011] FCA 761 has emphasised the importance of the use of effective disclaimers in advertising and the consequences of failing to do so, including large civil pecuniary penalties. Under the current legislation, a court may order a corporation to pay up to $1.1 million for each act of misleading and deceptive conduct.
The case involved Singtel Optus, a telecommunications provider, and their mass market advertising campaign for broadband services. The advertisements in question offered a plan consisting of "on and off" peak limits for the service. However, once the "on peak limit" had been reached under these plans, the speed allocated to the service was dramatically reduced for "off peak" usage as well as "on peak" usage. Disclaimers were used throughout the campaign but these were found by the Court to be essentially invisible in the television advertisements and ineffective in the online and print advertisements.
In considering how to assess the extent of the penalty, the Court considered the nature and extent of the damage caused, the circumstances under which the breach occurred and whether the person or company responsible had previously been found by a court to have engaged in any similar conduct. The Court also needed to determine the number of contraventions relevant in the circumstances. Optus argued that there had been only one breach, the single advertising campaign in its whole. However, the ACCC submitted and the Court accepted that there had been 11 breaches, one for each advertisement in each format. At this point the Court noted that it was not just a matter of simply working back from the maximum possible fine of $12.1 million but rather engaged in "an instinctive synthesis" weighing up different factors, including the fact that Optus had derived a large financial benefit from the scheme and that a penalty should be used to discourage this behaviour. The Court ordered a penalty of $5.26 million.
The Court went on to note that different forms of media attracted varying levels of attention from the public and that the strategies and resources used by Optus in screening the advertisements for compliance had not been sufficient given the size of their business and the expected revenue from the campaign.
Forum Law can assist you in properly constructing advertising and disclaimers so as to avoid misleading and deceptive conduct.
