Have you or someone you know ever told a personal story that included misleading or false statements for the sole purpose of making the story more appealing for the intended audience? I can assure you that you’re not alone. Stretching the truth for the idea of engaging your audience is more common than you may think. It just may be overlooked by the chosen audience. Leaving the protagonist with an impressive story about how they obtained designer ‘Beats’ headphones for a modest price, despite his underlying knowledge that they were fake. Though this is nothing shy of egocentric, it isn’t illegal. Nevertheless, matters would be conflicting if a business was advertising and engaging in conduct that misleads or deceives their consumers or other businesses. As a consequence, a company has a potential penalty of $10 million.
In a time where technology has revolutionized the world, and people as consumers are influenced by what they read and learn from their mediated public sphere, some frameworks on the internet can be misleading and therefore illegal. Although certain deceptive and misleading conducts advertised online may or may not be intentional, this is where the Australian Consumer Laws takes legal measures to resolve these issues.
What is the Australian Consumer Law?
The Australian consumer law (ACL) establishes Australia with a single, national consumer legislation. The ACL covers both laws and regulations aimed at providing a more equal environment for buyers and preventing dishonest tactics from being used by advertisers in the marketplace. These laws refer to all corporations and are applied throughout Australia.
‘Consumers’ are classified as the people or economic entities that purchase and/or hire products and services, assigning them as the end-users in the distribution chain of goods. Though we use the terms, consumer and customer, interchangeably, they often may not have the same meaning – a customer is not always a consumer.
The Australian Consumer Law (ACL) is inclusive of:
- a national unfair contract terms law covering standard form consumer and small business contracts;
- a national law guaranteeing consumer rights when buying goods and services;
- a national product safety law and enforcement system;
- a national law for unsolicited consumer agreements covering door-to-door sales and telephone sales;
- simple national rules for lay-by agreements; an
- penalties, enforcement powers and consumer redress options. [1]
In 2010 a comprehensive legislation was passed by the Parliament of Australia to unify and rationalise previously incoherent and ineffective state regulations relating to consumers. The new law reduced the compliance burden for businesses and creates a national harmonised system of consumer protection and product safety.
Who is liable?
While catching out a misleading or false statement from a fellow peer can be a humbling experience but an awkward lesson for them. Enforcing rules regarding deception and lying may be a bit extreme for a fellow peer to follow, however, this concept is exactly what needs to be brought to the table when running a business. The Australian Consumer Law is essentially one law enforced by several regulators.
“The ACL is imposed by the Australian Competition and Consumer Commission (ACCC), the state and territory fair trading agencies (e.g NSW Fair Trading) and, where it applies to financial services, the Australian Securities and Investments Commission (ASIC)” [2].
Thus, creating a strong network of governors.
Deceptive and misleading advertisements in the media
Businesses using social networking services such as Facebook, Twitter and YouTube are responsible for ensuring that the information on their platforms is correct, regardless of who puts it online. There are no specific or different consumer laws or regulations in place for social media. Consumer protection rules have existed in effect for decades and prohibit companies from creating fraudulent, misleading or dishonest statements about their goods or services. Such rules extend in the same manner to social media as on any other advertisement or distribution tool.
The use of deceptive and misleading advertisements and statements affect the media through the idea of disinformation that is believed by consumers to create more business for said corporation. This sort of conduct can result in heavy fines and imprisonment.
The Fyre festival – what went wrong
The Fyre Festival was vowed to be the 2017 ‘it’ event in America, as organisers Billy McFarland a wealthy entrepreneur and rapper Ja Rule guaranteed a VIP luxury experience in the Bahamas. McFarland planned to construct luxury tents, beach houses, and villas for attendees and VIP guests. As a result of the claim, the event sold out in 48 hours with ticket prices ranging from $500 US dollars to $12,000.
After gross mismanagement and empty financial promises, the festival failed miserably and therefore became evident that the promotional images they’d seen all over social media were part of a false advertising scam into which fans poured thousands of dollars. The festival had a marketing strategy that focused on
“selling a dream, selling a vacation, selling a concept,” as one staff member noted.
Ja Rule has been withdrawn from the $100 million lawsuit with McFarland being found guilty of Wire fraud – false advertisement to obtain money – in 2017. He was released on $300,000 bail in July.
Though this scandal is not Australian, it still showcases how tightly connected misleading and deceptive conduct and the modern, digital age are around the world. The ACL states
“It is unlawful for a trader to make false or misleading representations about goods or services when supplying, offering to supply or promoting goods or services. It is also unlawful to make or use false or misleading testimonials”[3].
Highlighting, that if the said festival was produced in Australia and under Australian Consumer Law, McFarland could have received a maximum imprisonment of 10 years and a $500,000 fine, as he obtained benefit by deception. This scandal caused problems with the Federal Trade Commission (FTC) for both the organisers and the influencers, as they had failed to advertise properly.
The Fyre Festival’s aspersion encourages consumers to consider the need for proof of safe transactions with guaranteed outcomes, despite how clear-cut it is to make online purchases. Hence, the fraudulent behaviour showcases the simplicity of which social media can be exploited in our new technological era to spread false perceptions and breach the Consumer Laws that are implemented.
The methods deployed by Billy McFarland, left vulnerable consumers believing these false advertisements and misleading and deceptive strategies, with the understanding they were paying for what was promoted. As a result of these fraudulent advertisements, the Fyre Festival suffered huge legal consequences which in turn conveyed the importance of implementing a strong legal system, in this case, as a correlation to Consumer Law.
Advice
The ACCC provides advice for you, the consumer, to follow when purchasing off the internet and outlines what rights you have when you shop online with an Australian business. Such rights may apply if you purchase from an overseas online company, but maintenance, replacement or refund could be complicated, as the company is not based in Australia.
These tips suggested by the ACCC will help protect you when shopping online:
- Only consider buying from online sellers in Australia or overseas that; have a good reputation, display clear processes for solving problems and giving replacements and refunds, display clear systems for protecting the security and privacy of your personal and financial details, display their business registration number, phone and fax numbers and physical address.
- Before buying, check terms and conditions carefully so you know what you’re paying for and that there are no hidden costs or restrictions.
- Before you start, ensure your computer, tablet or phone is secure by installing or updating security and anti-virus software [4]
The Australian consumer law helps to protect consumers from misleading and fraudulent conduct in trade and commerce businesses, and minimise consumer detriment. Nevertheless, the Fyre festival shows the impact of deceptive false advertisements can have on consumers. The Fyre Festival creates a national example about following regulations to creating a fair business-to-consumer environment.
Works Cited:
- Consumerlaw.gov.au. 2020. Home | Consumer Law. [online] Available at: <https://consumerlaw.gov.au/> [Accessed 29 April 2020].
- 2020. Hot Topics – Legal Issues In Plain Language. [ebook] Sydney: LIAC, pp.1-5. Available at: <https://www.correctiveservices.justice.nsw.gov.au/Documents/Related%20Links/libra> [Accessed 1 May 2020].
- Scamnet.wa.gov.au. n.d. Scamnet. [online] Available at: <https://www.scamnet.wa.gov.au/scamnet/Scam_prevention-Your_legal_rights_under_the_ACL.htm#False_or_misleading_representations> [Accessed 31 April 2020].
- Australian Competition and Consumer Commission. n.d. Shopping Online. [online] Available at: <https://www.accc.gov.au/consumers/online-shopping/shopping-online> [Accessed 2 May 2020].
References:
- Australian Competition and Consumer Commission. 2020. Advertising & Promoting Your Business. [online] Available at: <https://www.accc.gov.au/business/advertising-promoting-your-business> [Accessed 26 April 2020].
- Treasury.gov.au. 2009. An Introduction To The Australian Consumer Law | Treasury.Gov.Au. [online] Available at: <https://treasury.gov.au/speech/an-introduction-to-the-australian-consumer-law> [Accessed 26 April 2020].
- Findlaw. 2016. What Is Consumer Law? – Findlaw. [online] Available at: <https://hirealawyer.findlaw.com/choosing-the-right-lawyer/consumer-law.html> [Accessed 26 April 2020].
- Market Business News. 2020. Consumers – Definition And Meaning – Market Business News. [online] Available at: <https://marketbusinessnews.com/financial-glossary/consumers-definition-meaning/> [Accessed 30 April 2020].
- Marquet, D., 2018. ACCC Gets A Bigger Stick: Maximum Penalty For Breaching The Australian Consumer Law Substantially Increases – Corrs Chambers Westgarth. [online] Corrs Chambers Westgarth. Available at: <https://corrs.com.au/insights/accc-gets-a-bigger-stick-maximum-penalty-for-breaching-the-australian-consumer-law-substantially-increases> [Accessed 1 May 2020].