The fines for misleading and deceptive conduct can be astronomical. Several companies, including Uber, have recently been ordered to pay up to $44.7 million in penalties for misleading customers and breaching the Australian Consumer Law. This article explains the law of misleading and deceptive conduct, and summarises the proceedings to inform your business.
What is misleading and deceptive conduct?
Engaging in misleading and deceptive conduct is illegal under the Australian Consumer Law (ACL). Businesses are not allowed to make false or misleading representations, or those that are likely to give a false impression or mislead consumers. This includes misleading or deceptive advertisements, packaging, information and statements. Importantly, your intention in making the representation is not relevant in considering whether conduct was misleading or deceptive. This means that you can be liable for penalties even if you did not mean to mislead consumers or provide false information.
How did Uber mislead consumers?
Rideshare company Uber admitted that it breached the ACL by making misleading statements in its cancellation warning messages and fare estimates. It has agreed to pay penalties of $26 million as a result.
Between 2017 and 2021, the Uber app displayed a pop-up message that ‘you may be charged a small fee since your driver is already on their way’ for consumers who wanted to cancel their ride. This was misleading to customers as Uber had a free cancellation period under its own policy. The message has since been changed to ‘you won’t be charged a cancellation fee’.
Additionally, Uber admitted that between 2018 and 2020, it falsely represented that the fare of an Uber Taxi would be within the estimated fare range displayed on the app. The algorithm used to calculate this fare range inflated the cost, so the actual fare was almost always cheaper. Even though this may appear to benefit consumers, it was ultimately misleading because consumers rely on accurate information to help them make an informed choice between rideshare options. The Uber Taxi option has since been removed.
How did Trivago mislead consumers?
Hotel booking website Trivago breached the ACL by misleading consumers when advertising that it would help consumers find the cheapest option for hotels. The Trivago website algorithm highlighted to customers the hotel options which paid Trivago the highest cost-per-click fee, rather than the cheapest options for consumers. The Federal Court has ordered Trivago to pay $44.7 million in penalties as a result.
How did Tiger Mist allegedly mislead consumers?
Clothing retailer Tiger Mist paid penalties of $26,640 for allegedly misleading consumers about their right to return faulty items. The Tiger Mist website stated that consumers could only return faulty items within 30 days of the order and if the items were in their original packaging. This was allegedly misleading as consumers have rights under the ACL to remedies for faulty products, regardless of the time period or whether it is in its original packaging. The statements have since been removed from the website.
- Businesses are not allowed to engage in misleading or deceptive conduct, or conduct that is likely to mislead or deceive. This is illegal under the Australian Consumer Law.
- You can still be liable to pay penalties even if you did not intend to mislead or deceive consumers.
- Businesses should ensure that all the information they provide to consumers is accurate and up-to-date, including on apps, websites and advertisements.
- Businesses should ensure that any algorithms used in their apps or websites produce results which are consistent with their advertisements.
- Consumers have rights under the ACL that cannot be excluded by your business policies.
Gladwin Legal are experts in consumer and compliance law. If you need help understanding your legal obligations or require review or drafting of your agreements, terms or policies, please contact us at or 1300 033 934.