Summary of Fair Trading Act



6. First Impressions
With all advertising, the first impression made on a potential customer is vital. People reading, seeing or hearing an advertisement react to and make decisions based on that first impression. In making that impression, sometimes what is not said is just as important as what is said. Obviously, the amount of information that can be included in any advertisement is limited and every word or picture has to count.

But you must include all the information necessary for a potential customer to make an informed choice about the goods or services and the value they represent. Failure to reveal vital information could be misleading or deceptive, and may breach the Act. You must also make sure that the information cannot be easily overlooked. Any conditions or important points must be presented in a clearly comprehensible form.

Example

A trader offered inexpensive travel packages to Hawaii. However, the marketing failed to disclose that there was a minimum stay which had to be in specified hotels. The conditions meant that the ‘inexpensive travel packages’ were in fact more expensive than those available through travel agents. The Commission was granted an injunction restraining the trader from advertising or promoting the travel to individuals or the public.


7. Fine Print
Many advertisements include fine print sections containing details of conditions and qualifications. However, you must not use fine print to conceal important information which would be critical to people’s decision to buy your goods or services. Fine print cannot be used to modify a claim made in the “big print” or headline.

If the overall impression given by an advertisement is misleading, information contained in fine print may not save you from prosecution for breaching the Act. If there are important conditions on a sale, or on other transactions such as finance agreements, these should be shown in a bold, clear and compelling way in the advertisement. “Special Conditions Apply” does not protect you when the conditions are inconsistent with or modify the main message.

Example:

A bank advertised a mortgage product on television and in the newspapers. In both cases there was fine print at the end of the advertisement which modified the offer that was represented in the body of the advertisement. The bank was convicted and fined $16,000 under the Fair Trading Act.

Fine print is also often used in contracts. In a number of cases, courts have decided that you cannot rely on fine print conditions in a contract if you previously made false or misleading statements to encourage the signing of the contract. You should also take care that fine print in your contracts does not conflict with any statutory obligations. In particular, you should not attempt to limit a consumer's rights under the Consumer Guarantees Act.


8. Image Advertising
Image advertising is the use of appealing images to influence how consumers view products. The hope is that people will buy the product because they associate it with the memorable, appealing image. A company may seek to convey an image of concern about the environment by using “a clean green image” in its advertisements, or designs featuring dolphins or plants. The image may be strengthened by using well-known personalities, with appropriate associations, to promote the product.

You may think that because nothing is actually said or written to create the “image” so important in image advertising, it cannot be accused of being a false or misleading representation. However, a representation has been made, and it may be in breach of the Fair Trading Act if found to create an impression which cannot be substantiated.

In other words, don’t use advertising to create an image for your product or service which can’t be backed up by the facts.

Example:

A company marketed a canned ham product which stated it was "90% fat free", "Light Deli Ham" and "Healthier Eating". However, the product had up to three times more fat than comparable products. The company was convicted.