Posted by Hugh James
The Federal Court's decision by Justice Collier last month to fine Harvey Norman $1.25 million for misleading advertising is a timely reminder for businesses to ensure that their campaign reflects what they can ultimately deliver to consumers.
The decision
Harvey Norman was found to have breached sections 18 and 29 of the Australian Consumer Law (forming Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (ACL) (as well the equivalent provisions of the now repealed Trade Practices Act 1974) by misleading consumers in non-metropolitan areas during its "3D Finals Fever" advertising campaign, which ran in periods between October 2008 and July 2011.
As part of the Federal Court action, the Australian Competition and Consumer Commission (ACCC) claimed Harvey Norman's catalogue advertisements gave consumers the impression that 3D TVs purchased from Harvey Norman could be used in all areas the catalogue was distributed. In particular, the advertising suggested that consumers could watch the 2010 AFL and NRL grand finals in 3D. In fact, 3D broadcasts of the grand finals were only available in metropolitan areas.
In Justice Collier's view, Harvey Norman's fine print disclosures did not counterbalance the overall impression of its catalogue advertisements. Her Honour found that, in light of Harvey Norman's knowledge of the 3D broadcast limitations, the campaign was 'seriously misleading and deceptive, on a significant and far-reaching scale'. In response to the large fine imposed on Harvey Norman under the decision, ACCC Chairman Rod Sims has emphasised the responsibility of retailers to provide consumers with correct information as part of any advertising campaign. This is especially the case where new technology is offered, as consumers may rely on retailers to provide details about how the new technology works. The ACCC Chairman has also stated that where retailers use aggressive advertising campaigns, they face greater scrutiny by the ACCC to comply with the ACL.
What does this mean for businesses?
Businesses intending to offer consumers emerging technology products ought to do their homework before implementing any large-scale, multi-media advertising campaigns. That homework should include technical and compliance planning, not just the inclusion of limited fine print disclosures.
Failure to include appropriate disclosures in advertising about new technologies is likely to attract the attention of the ACCC, and potentially risk a hefty fine from the Federal Court.
Partner: Paul Kallenbach
The decision
Harvey Norman was found to have breached sections 18 and 29 of the Australian Consumer Law (forming Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (ACL) (as well the equivalent provisions of the now repealed Trade Practices Act 1974) by misleading consumers in non-metropolitan areas during its "3D Finals Fever" advertising campaign, which ran in periods between October 2008 and July 2011.
As part of the Federal Court action, the Australian Competition and Consumer Commission (ACCC) claimed Harvey Norman's catalogue advertisements gave consumers the impression that 3D TVs purchased from Harvey Norman could be used in all areas the catalogue was distributed. In particular, the advertising suggested that consumers could watch the 2010 AFL and NRL grand finals in 3D. In fact, 3D broadcasts of the grand finals were only available in metropolitan areas.
In Justice Collier's view, Harvey Norman's fine print disclosures did not counterbalance the overall impression of its catalogue advertisements. Her Honour found that, in light of Harvey Norman's knowledge of the 3D broadcast limitations, the campaign was 'seriously misleading and deceptive, on a significant and far-reaching scale'. In response to the large fine imposed on Harvey Norman under the decision, ACCC Chairman Rod Sims has emphasised the responsibility of retailers to provide consumers with correct information as part of any advertising campaign. This is especially the case where new technology is offered, as consumers may rely on retailers to provide details about how the new technology works. The ACCC Chairman has also stated that where retailers use aggressive advertising campaigns, they face greater scrutiny by the ACCC to comply with the ACL.
What does this mean for businesses?
Businesses intending to offer consumers emerging technology products ought to do their homework before implementing any large-scale, multi-media advertising campaigns. That homework should include technical and compliance planning, not just the inclusion of limited fine print disclosures.
Failure to include appropriate disclosures in advertising about new technologies is likely to attract the attention of the ACCC, and potentially risk a hefty fine from the Federal Court.
Partner: Paul Kallenbach
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