Building a trusted brand takes time, effort and consistency. One misleading ad, an ambiguous claim on your website, or a competitor trying to piggyback on your reputation can undo years of work.
In Australia, two powerful legal tools help you keep things fair: Section 18 of the Australian Consumer Law (ACL) and the common law tort of passing off. They often appear together in disputes about misleading conduct, but they do different things and have different requirements.
In this guide, we’ll explain each concept in plain English, highlight the key differences, and share practical steps you can take to keep your marketing compliant and your brand protected.
What Does Section 18 Of The ACL Prohibit?
Section 18 of the Australian Consumer Law is the bedrock rule against misleading or deceptive conduct in trade or commerce. In short, it says you must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive, when you’re operating your business.
What counts as “misleading or deceptive”?
It’s broader than outright lies. Conduct can mislead by what it says, what it doesn’t say (silence can mislead), how it’s presented, or the overall impression it creates. It’s assessed in context and by reference to the likely audience.
Common examples include overstating performance, using ambiguous “fine print” to walk back bold claims, implying endorsements that don’t exist, or copying another brand’s look and feel in a way that confuses customers.
If you want to dive deeper into how courts assess this, it’s worth reading a breakdown of the elements of misleading or deceptive conduct.
Does intent matter?
No. Section 18 is about the effect of your conduct, not your intention. An honest mistake can still breach the ACL if it misleads consumers.
Where does Section 18 apply?
Almost everything you do in “trade or commerce” is covered: ads, website and app content, packaging, social posts, emails, sales pitches, proposal documents, and in-store interactions. B2C and B2B communications can both be caught.
What remedies are available if Section 18 is breached?
Section 18 itself doesn’t impose fines. However, courts can grant orders including:
- Injunctions to stop the conduct (under ACL s232).
- Compensation to those who suffered loss because of the conduct (under ACL s236).
- Corrective advertising or other remedial orders in appropriate cases.
The Australian Competition and Consumer Commission (ACCC) can investigate and bring proceedings, but it’s the courts that make and enforce these orders. For more context on the legal test and how to stay on the right side of the law, see this overview of Section 18 of the Australian Consumer Law.
What Is Passing Off And When Does It Apply?
Passing off is a common law action that protects the goodwill you’ve built in your brand. It prevents others from misrepresenting their goods or services as being connected with yours when that misrepresentation causes, or is likely to cause, damage.
When is passing off useful?
It’s particularly valuable where your branding is not yet registered as a trade mark (or you’re dealing with aspects of reputation not covered by a registration). If a competitor adopts a confusingly similar name, logo, packaging, slogan, or “get-up” that leads customers to think there’s an association with your business, passing off may be available.
Elements you need to prove
- Goodwill or reputation: Your business enjoys a reputation among the relevant public. Evidence can include sales, marketing, media, social following, and customer recognition.
- Misrepresentation: The other party’s conduct misrepresents a commercial connection with your business, or suggests their goods/services are yours.
- Damage: The misrepresentation has caused, or is likely to cause, damage to your goodwill (for example, lost sales, brand dilution, or complaints directed to you about their product).
Remedies for passing off
If you succeed, the court can grant:
- Injunctions to stop the conduct.
- Damages to compensate your loss, or an account of profits (handing over the profits the wrongdoer made from the misrepresentation).
- Orders for delivery up or destruction of infringing materials, and sometimes corrective statements.
Courts focus on compensating you and stripping wrongful gains. Punitive or exemplary damages are not typical in passing off claims in Australia.
Section 18 vs Passing Off: What’s The Difference?
These two causes of action often appear together, but they’re not the same. Here’s how they differ and why you might rely on one or both.
Who do they protect?
- Section 18 ACL: Protects consumers and the integrity of the market by prohibiting misleading conduct. Businesses can also sue if they suffer loss due to another business’s misleading conduct.
- Passing off: Protects your business’s goodwill from competitors trying to ride on your reputation.
What do you need to prove?
- Section 18 ACL: Conduct was misleading or deceptive (or likely to mislead or deceive) in trade or commerce. No need to show reputation or actual damage at the time of the conduct-though loss must be shown to obtain compensation.
- Passing off: You must show existing goodwill, a misrepresentation, and resulting damage (or a real likelihood of damage).
What orders can a court make?
- Section 18 ACL: Injunctions, compensation, and corrective orders. No civil penalties are attached to s18 itself, although other ACL provisions (like specific false representation provisions) can attract penalties.
- Passing off: Injunctions, damages or an account of profits, and delivery up orders. Punitive awards are rare.
When would you run both?
In many brand confusion disputes, both are pleaded. Section 18 addresses misleading market impressions. Passing off addresses misappropriation of your hard-won reputation. Together, they can provide a more complete pathway to relief.
Practical Steps To Protect Your Brand (And Stay Compliant)
You don’t need to wait for a problem to take action. There’s a lot you can do now to minimise risk, strengthen your brand position, and respond quickly if issues arise.
1) Keep your marketing clear, accurate and consistent
- Audit your website, ads, packaging, social media and sales materials for claims that could be read the wrong way.
- Avoid absolute claims unless you can substantiate them (for example, “100% organic” or “the only…”).
- Use disclaimers or qualifications where necessary, but make sure they’re prominent and don’t contradict the headline message.
- Train your team so sales scripts and support responses align with written claims.
2) Lock down your brand assets early
- Choose a distinctive name and logo that aren’t close to existing traders in your space.
- Register your core brand as a trade mark-this is often the most efficient way to secure exclusive rights. If you’re unsure where to start, consider getting help to register your trade mark.
- Document your brand guidelines to ensure consistent use across touchpoints.
3) Use the right website legal notices
- Publish a Privacy Policy that explains how you collect and use personal information (this is essential if you collect customer data online).
- Include Website Terms & Conditions covering acceptable use, IP ownership, disclaimers, and liability limits.
- If you sell online, ensure your customer terms set out price, delivery, refunds/returns, and warranties in a way that complies with the ACL.
4) Bake compliance into your contracts and processes
- Make sure your sales and customer service processes reflect ACL rights (for example, consumer guarantees and remedies).
- Set approval steps for marketing claims, product labels, and promotional campaigns so someone checks for accuracy before publication.
- Include compliance undertakings in supplier and reseller agreements (for example, accurate product descriptions and approved marketing assets).
Use an NDA before sharing early brand concepts, launch strategies, pricing models or unique product features with agencies, contractors, or potential partners. It’s much easier to prevent leaks than to fix them.
6) Watch the market and respond quickly
- Set up alerts for your brand and key product names.
- Keep screenshots and date-stamped evidence if you spot confusing conduct by others.
- Consider a staged response: initial “cease and desist” letter, then escalations if needed (injunctive relief is often time-sensitive where confusion is active).
7) Get your internal governance right
If you have co-founders or plan to raise capital, align on brand ownership and control from the outset. A clear Shareholders Agreement (and clarifying who owns IP created by founders and contractors) helps avoid internal disputes that can spill into the market.
Common Pitfalls (With Simple Fixes)
Here are issues we often see-and practical ways to fix them before they become legal problems.
“Everyone says this, so it must be fine.”
Industry-wide puffery and “standard” claims can still mislead. If you can’t substantiate a claim, tone it down or reword it to be accurate. Swap “clinically proven” for “tested with participants and showed result,” if that’s the truth.
Small print that undermines the headline
If a headline promises one thing, but the small print takes it away, courts will focus on the overall impression. Keep qualifications close to the main claim, and make sure they don’t contradict it.
Lookalike branding to “surf” competitor traffic
Near-identical colour schemes, fonts and packaging can cross the line. Even if you never name the competitor, the overall impression can mislead customers and trigger both Section 18 and passing off claims.
If an influencer or reseller makes misleading claims about your product, you can share responsibility. Provide clear guidelines and pre-approval processes, and keep records of what you’ve approved.
Not documenting consumer law processes
Train staff and document your ACL processes (refunds, repairs, replacements). If a complaint escalates, being able to show consistent, compliant processes will help-both in resolving the issue and in any legal proceedings.
How These Claims Play Out In Practice
To make things concrete, here are a few typical scenarios and how Section 18 and passing off would be assessed.
Scenario 1: The “as used by” endorsement
A skincare brand suggests a popular athlete uses its products, but there’s no formal relationship. Even without naming the person, imagery and captions imply endorsement. That’s likely misleading under Section 18. A court could order the brand to stop the campaign and compensate customers who relied on the claim.
Scenario 2: Lookalike packaging on supermarket shelves
A new beverage uses similar colours, bottle shape, and label layout to a market leader. Shoppers start picking it up by mistake. This could be both Section 18 (misleading overall impression) and passing off (misappropriating goodwill). Remedies could include an injunction to change the get-up, damages or an account of profits, and delivery up of infringing stock.
Scenario 3: “The only app that…”
A tech startup claims it’s the only app offering a feature. Two competitors already do. Without proof, that’s risky under Section 18. The fix is simple: verify the claim or reword it to something accurate (for example, “designed for , with ”).
Scenario 4: Same name, different state
A cafe chain expands interstate and discovers a local cafe with a near-identical name. If the local cafe had prior goodwill, it may rely on passing off to stop the newcomer using the name in that area. This is where early trade mark strategy and clearance searches pay off.
Key Takeaways
- Section 18 of the ACL bans misleading or deceptive conduct in trade or commerce; it focuses on the overall impression your marketing creates, not just literal accuracy.
- Passing off protects the goodwill in your brand from misrepresentation by competitors, especially where customers may think there’s a connection between you and them.
- Courts-not the ACCC-grant remedies for Section 18 breaches, including injunctions and compensation; passing off remedies include injunctions, damages or an account of profits, and delivery up.
- Proactive steps-accurate claims, clear disclaimers, consistent branding, a Privacy Policy and robust Website Terms & Conditions-reduce risk and help you respond quickly if issues arise.
- Registering your brand early via a trade mark and using an NDA for sensitive information strengthens your position in any dispute.
- If you’re unsure whether a claim or campaign might mislead, get advice early-tweaks at the drafting stage are far cheaper than litigation later.
If you’d like a consultation on Section 18 ACL compliance and passing off strategy for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
