As a business owner in Australia, you work hard to build trust with your customers and clients. That trust, however, can be lost quickly if your business is seen as being misleading or deceptive - even unintentionally. The law takes misleading or deceptive conduct very seriously, and even a simple oversight can lead to compliance issues, customer disputes or expensive legal claims.
But what exactly counts as “misleading or deceptive conduct” in Australia? More importantly, what are the elements the law looks at to determine whether conduct crosses the line, and what can you do if your business faces such a complaint - or if you believe you’ve been misled?
Understanding the essentials of misleading or deceptive conduct will empower you to trade confidently, comply with the
Australian Consumer Law (ACL), and know what remedies are available if things go wrong. In this guide, we’ll break down the key elements, how the courts assess this type of conduct, and what steps you can take if you need to address or defend claims of misleading conduct.
What Is Misleading or Deceptive Conduct?
Misleading or deceptive conduct is a central concept under the Australian Consumer Law (ACL), which is set out in Schedule 2 of the
Competition and Consumer Act 2010 (Cth). At its core, the law forbids businesses from engaging in conduct that is likely to mislead or deceive consumers or other businesses.
You’ll hear the phrase “misleading or deceptive conduct” used a lot in business law. But what does it really mean in practice?
Here’s the key section (Section 18 of the ACL):
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
This means that not only is actually misleading someone illegal, but so is conduct that is likely to mislead, even if no one is actually misled. This covers advertising, statements made during sales, product descriptions, website information, and even omissions (not telling the full truth when you have a responsibility to).
Importantly, the law applies regardless of whether the misleading or deceptive conduct was intentional. Good intentions are not enough - if the result is misleading, you could be in breach of the ACL.
What Are the Elements of Misleading or Deceptive Conduct?
To decide whether conduct is “misleading or deceptive,” the courts look at several specific elements. Being aware of these can help you stay on the right side of the law and avoid common pitfalls.
1. Conduct in Trade or Commerce
The misleading or deceptive conduct must take place “in trade or commerce.” In other words, it has to relate to business activities: selling goods or services, providing advertising, negotiating contracts, etc. Private conduct (such as giving personal advice to a friend outside a business context) generally isn’t covered.
2. The Conduct Must Be Misleading or Deceptive (or Likely to Be)
This is the heart of the test. Courts will look at whether the conduct in question actually led (or was likely to lead) to someone being misled or deceived. “Mislead” means causing a false belief, and “deceive” is about causing someone to believe something untrue.
The law covers a range of scenarios, including:
- Making statements that are false or create a false impression (e.g., exaggerated claims about a product’s results)
- Omitting relevant facts that the customer needs to know before making a purchase
- Presenting information in a way that confuses or tricks the consumer
It doesn’t matter whether you intended to mislead. The effect on the consumer or small business is what matters.
3. The Overall Impression Counts
Court decisions repeatedly remind us that “it’s the overall impression that counts.” The law isn’t just focused on isolated words, but the context in which information is presented - the combination of wording, visuals, disclaimers (or hidden conditions), and what a reasonable member of your target audience would believe.
For example, if a website headline claims “Satisfaction Guaranteed,” but the fine print says “no refunds under any circumstances,” a court may find that the overall impression is misleading.
4. Actual Deception Is Not Required
It’s not necessary for someone to actually be misled - even conduct that is
likely to mislead or deceive can be found in breach of the law. This makes the standard even stricter for businesses: courts will consider whether there is a
real - not fanciful or remote - possibility that someone could be misled in the circumstances.
5. Consideration of the Audience
The “target audience” is a crucial factor. The court considers who the typical or intended recipient of the message is: are they the “average” consumer, or a more sophisticated businessperson? What level of knowledge would they reasonably have? What assumptions might they make?
For example, technical product information targeted at engineers may be judged differently from advertising aimed at the general public.
6. Silence or Omissions Can Be Misleading
Misleading or deceptive conduct is not limited to what is said - what isn’t said can be just as important. If you leave out important details, or fail to correct someone’s misunderstanding, you can still be held liable for misleading or deceptive conduct. Businesses have a responsibility to proactively prevent misunderstandings in many situations.
You can read more about how the ACL defines “consumer” and what businesses must be aware of in our guide:
Definition of Consumer.
Common Examples of Misleading or Deceptive Conduct
Seeing how the law is applied in real-life situations can help clarify what counts as misleading or deceptive conduct. Here are some typical scenarios:
- Advertising a “sale” price when the product was never sold at the higher price previously
- Using fine print to hide exclusions, while making broad claims in larger print (for example, “Free Gifts With Every Purchase” when only certain customers qualify)
- Omitting key facts about a product or service (such as not disclosing known faults in a secondhand item)
- Implying that a product is endorsed by a celebrity, government, or authority when it’s not
- Making predictions about future events as if they are guaranteed, without reasonable grounds (for example, promising specific investment returns)
- Providing misleading statistics or comparisons to persuade a purchase
- Failing to correct a known misunderstanding when you are aware that a customer has a false impression of your offering
If you’re unsure whether your advertising or business practices could be seen as misleading, it’s worth consulting a
consumer law expert for tailored advice.
Are There Any Defences or Excuses?
Many business owners are surprised to learn that having honest intentions isn’t a defence to a claim of misleading or deceptive conduct. Even if you did not mean to mislead - or you copied marketing language from elsewhere and thought it was fine - you may still be liable if the effect was misleading.
The fact that a person should have read the fine print, or made further inquiries, also does
not protect you if your overall conduct was misleading. The court will ask whether a member of your target audience would reasonably have been misled.
However, the Law Does Recognise a Few Limitations:
- If the conduct occurred outside “trade or commerce” - for example, in a private sale of household goods between friends - then the ACL provisions won’t apply.
- Some degree of “puffery” - obvious exaggeration that no reasonable person would take seriously (e.g., “the best pizza in the universe!”) - is generally not considered misleading. But be careful: what counts as puffery is interpreted strictly.
- There may be other, less common statutory defences (such as relying on external information that was reasonable in the circumstances), but these are rare in practice.
Remedies for Misleading or Deceptive Conduct
If you - or your business - have suffered loss or been placed at a disadvantage because of misleading or deceptive conduct, the ACL provides several remedies. Similarly, if your business has been accused, it’s important to understand what may be ordered by the court.
Possible Remedies Include:
- Injunctions: The court can order a business to stop (or refrain from) certain conduct, such as pulling down deceptive advertising or ceasing misleading representations.
- Damages (Compensation): If you can show you have suffered loss as a result of the misleading conduct, the other party may be ordered to pay damages to put you back in the position you would have been in but for the conduct.
- Orders to Vary or Void Contracts: Courts can set aside or amend contracts if they were entered into as a result of misleading or deceptive conduct.
- Corrective Advertising: The business may be required to publish corrections or clarifications to fix the misleading impression.
- Other Orders: Courts have broad powers under the ACL to make orders they see as appropriate, including refunds, repairs, or replacement of goods.
If your business is on the receiving end of a complaint or legal action, it’s crucial to get legal advice early. Sprintlaw’s lawyers can help you assess your position, respond to regulators such as the
Australian Competition and Consumer Commission (ACCC) or your state’s consumer regulator (for example, NSW Fair Trading), and minimise your risk exposure.
To learn more about options if a contract or purchase has gone wrong, check out our guide on
returns, refunds and exchanges under Australian Consumer Law.
What Legal Documents Can Help Your Business Stay Compliant?
One of the best ways for businesses to avoid accidentally engaging in misleading or deceptive conduct is to have clear, accurate, and
legally reviewed contracts and documents. Here are some essentials to consider:
- Customer Terms & Conditions: Clearly outline what your product or service includes, any limitations, fees, or important exclusions. This makes your offering transparent to customers. Read more about website terms and conditions here.
- Privacy Policy: If your business is an APP entity under the Privacy Act 1988 (Cth) (generally those with annual turnover over $3 million, or certain small businesses handling sensitive data), you are legally required to have a Privacy Policy. Even if you’re not legally required, having one is best practice to build transparency and trust.
- Disclaimers: Use appropriately-placed disclaimers to clarify things like “results may vary” or “images for illustrative purposes only,” but remember these cannot override misleading overall impressions. Here’s our guide to disclaimers.
- Marketing and Advertising Policies: Ensure all staff know the relevant rules and are trained in ACL compliance to avoid missteps when creating copy, sales presentations or customer deals.
- Product Descriptions and Supply Agreements: Work with suppliers to double-check that representations made about goods are accurate and up to date in your descriptions and contracts.
Every business will have different needs. It’s a good idea to review your key documents, both online and offline, to make sure you’re up to date with consumer law and best practices.
What Should I Do If I’m Faced With a Complaint?
If a consumer or another business claims your conduct is misleading or deceptive, don’t panic - but do act quickly. Here’s a step-by-step approach:
- Review the Complaint: Read the complaint carefully and identify the specific conduct or statements alleged to be misleading.
- Pause the Conduct if Appropriate: If there’s a risk you may be in breach, consider stopping the relevant advertising or sales activity temporarily while you investigate.
- Gather the Facts: Collect evidence (emails, contracts, marketing materials, website screenshots) to help explain your position.
- Seek Legal Advice: Get in touch with a legal expert familiar with consumer law. They can advise you on the strength of the claim and the best way to respond.
- Consider Resolution: Where possible, resolve the complaint before it escalates, such as by clarifying the situation to the consumer, refunding money, or updating your business processes.
If an ACCC or regulator investigation is involved, or the issue is serious, early legal support is crucial to protect your business and reputation.
How Do I Reduce the Risk of Misleading Conduct in My Business?
Prevention is always better than cure. Here are simple steps you can take to reduce the risk of accidentally engaging in misleading or deceptive conduct:
- Regularly review all marketing and advertising communications for accuracy and clarity.
- Make your terms and conditions easy to read and prominent to the consumer before sale.
- Be proactive in communicating any major changes (price, service, functionality, etc.) to existing customers.
- Train your staff in ACL obligations, particularly sales and customer service staff.
- Monitor customer feedback - recurring complaints or questions can signal areas where your messaging is unclear or possibly misleading.
- Have your key contracts and marketing copy reviewed by a lawyer with expertise in misleading conduct, especially if you’re launching a big campaign or new product.
Remember: your reputation as a trustworthy business is one of your most valuable assets. Staying transparent and compliant builds strong relationships with your customers and the wider community.
Key Takeaways
- Misleading or deceptive conduct is broadly prohibited under Australian Consumer Law - even if it’s unintentional or no one is actually misled.
- The law looks at several elements, including whether the conduct was “in trade or commerce”, the overall impression, and who the target audience is.
- Both what you say and what you fail to say (omissions) can be considered misleading in the right context.
- Remedies for misleading conduct include injunctions, damages, voiding contracts, and corrective advertising.
- Having clear, accurate contracts and policies (like Terms & Conditions, Disclaimers, and Privacy Policies) limits your risk and builds customer trust.
- If faced with a complaint, seek legal advice early - prompt action can often resolve issues with minimal impact to your business.
If you’d like a consultation on misleading or deceptive conduct and what it means for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
