The challenge? Many businesses unintentionally cross the line — sometimes through exaggerated marketing claims, unclear fine print, or outdated product information. This article explains when your business could be liable for misleading advertising, the potential consequences, and how to avoid costly mistakes.
What Is Misleading Advertising?
Misleading advertising occurs when a business makes statements, omissions, or implications that create a false impression in the minds of consumers.
Under section 18 of the Australian Consumer Law, misleading or deceptive conduct can arise from:
False product descriptions - e.g., claiming a product is “100% organic” when it contains synthetic ingredients.
Unsubstantiated claims - e.g., advertising a weight-loss product as “clinically proven” without scientific evidence.
Misleading pricing - e.g., advertising a “sale” price when it is the normal price.
Omissions of key facts - e.g., leaving out terms that materially affect the product’s value or function.
Importantly, intent is irrelevant — a business can still be liable even if it did not mean to mislead consumers.
Legal Framework: Commercial and Corporate Law
Misleading advertising is regulated primarily under the Competition and Consumer Act 2010 (CCA), which incorporates the ACL. Enforcement is carried out by the Australian Competition and Consumer Commission (ACCC).
Key provisions include:
Section 18 ACL - Prohibits misleading or deceptive conduct in trade or commerce.
Section 29 ACL - Prohibits false or misleading representations about goods or services.
Section 33 ACL - Prohibits conduct that is liable to mislead the public about the nature, characteristics, suitability, or quantity of goods or services.
Breaches can result in:
Heavy civil penalties (up to $50 million for corporations in serious cases).
Compensation orders for affected consumers.
Court orders requiring corrective advertising.
Examples of Misleading Advertising Cases
Coles “Freshly Baked” Bread Case - In 2014, Coles was fined $2.5 million after the ACCC found it had misled customers by labelling bread as “freshly baked” in-store when it had been partially baked overseas and frozen before sale.
Volkswagen Emissions Scandal - Volkswagen paid $125 million in penalties after it was found to have made false representations about compliance with Australian diesel emissions standards.
Lorna Jane Activewear COVID-19 Claims - In 2021, Lorna Jane was fined $5 million for promoting clothing with “anti-virus” protection without scientific proof.
These cases highlight that misleading advertising is taken seriously — regardless of industry.
When Is Your Business Liable?
Your business could be liable if:
Your marketing claims cannot be substantiated - e.g., performance guarantees without credible evidence.
Fine print contradicts the main message - Courts often consider the overall impression, not just disclaimers.
Images or demonstrations misrepresent reality - e.g., using enhanced or edited photos that exaggerate results.
You rely on third-party content without verification - Businesses are responsible for all advertising they authorise, even if outsourced.
Competitor comparisons are misleading - Comparative advertising must be factually correct and not unfairly disparaging.
How to Avoid Misleading Advertising Liability
To comply with Commercial and Corporate Law and the ACL:
Verify all claims - Keep written records of evidence supporting your marketing statements.
Be clear and upfront - Avoid using fine print to hide important information.
Use realistic images and demonstrations - Avoid digitally altering products to appear better than they are.
Regularly review advertising - Update promotional material to ensure it remains accurate.
Train your team - Marketing, sales, and customer service staff should understand the ACL’s requirements.
Engage legal review - Have a Commercial and Corporate Law specialist check your advertising for compliance.
Consequences of Non-Compliance
The penalties for misleading advertising can be severe:
Financial penalties - Multi-million-dollar fines for corporations.
Reputational damage - Loss of consumer trust and media scrutiny.
Operational impacts - Mandatory corrective actions and compliance programs.
Beyond legal costs, the damage to brand credibility can take years to repair.
Misleading advertising is not just bad for business — it’s illegal. Under Australia’s Commercial and Corporate Law, companies must ensure that every marketing message is truthful, clear, and backed by evidence. Even well-intentioned campaigns can breach the law if they create a false impression.
The safest approach is proactive compliance: verify claims, be transparent, and seek expert legal advice before running campaigns. Doing so protects your business from legal action and builds long-term trust with consumers.
