- Are you planning a giveaway, discount, or prize to attract customers - but not sure how to go about it?
- Do you advertise a price of your service without including booking fees, surcharges or extra charges?
- Have you received an invoice or payment request for something you didn’t order?
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Advertising and promotional activities are an important part of building a brand and attracting new customers.
A small number of businesses use misleading tactics to trick their customers or pressure them into buying products or services they wouldn't otherwise buy. You must avoid these practices when advertising and promoting your products or services. Claims must be clear, truthful and accurate under the law.
Learn more about advertising and promotions.
Pricing techniques
Pricing can be used to attract customers and make sales. It is an important factor in decision-making. Businesses should take extra care not to use misleading pricing techniques or make false representations about price. You should always disclose the full price of products or services. The following techniques are usually unfair:
- component pricing
- displaying inaccurate or misleading prices
- multiple pricing
- drip pricing
- misleading discount advertising
Learn more in the toolkit about displaying prices.
Fine print qualifications
Businesses can’t rely on small print and disclaimers as an excuse for an overall misleading message. Information in fine print and qualifications must not conflict with the overall message of the advertisement. If your business needs to qualify its advertisements, make sure the qualifying statements are clear and prominent so customers know what the real offer is.
Example
A residential gardener offers every fifth lawn mowing service at half-price. The offer is made through a series of radio ads, with a quick mention that ‘terms and conditions apply’. The terms and conditions are onerous: the deal only applies to lawn mowing on Monday mornings and the customer must be a pensioner living within a 2 km radius of the business.
The failure to clarify or explain important elements of the offer is likely to mislead customers and breach the law.
Bait advertising
Most businesses offer items for sale at low prices to attract customers to the business. This is a legitimate form of advertising.
Bait advertising, however, is when you advertise specific prices, usually ‘sale’ prices, on products that aren’t available or are only available in very limited quantities.
You should only offer products or services at a ‘special price’ if they’re available in reasonable quantities for a reasonable period, unless you state clearly that the product is in short supply or on sale for a limited time.
Example
An electronics retailer advertises 50-inch televisions at a special price of $799 for a week-long sale. The retailer usually sells about 30 of these types of televisions every week. The retailer only stocks 10 televisions at the advertised price and refuses to take customer orders.
When customers attempt to buy the television at the advertised price, they’re told it’s out of stock and are offered a more expensive unit for $999. This is likely to be bait advertising as the retailer doesn’t have a reasonable supply of the advertised product.
Comparative advertising
Some advertisements may compare products or services to others on the market. Comparisons may be about any factors including:
- price
- quality
- range
- volume.
Comparative advertising, sometimes referred to as comparison advertising, can be misleading if either:
- the comparison is inaccurate
- it doesn’t compare products fairly.
Example
A small landscaping business sends out a flyer claiming that its lawn care services are cheaper than other businesses in the area. While the business’ services are cheaper than some others in the area, they are in fact more expensive than many others.
As the comparison is inaccurate, this claim may be misleading.
Offering rebates, gifts, prizes and other free items
When supplying or promoting products or services, it’s against the law to offer rebates, gifts, prizes or other free items if you don’t intend to provide them. A rebate or gift must be provided within the specified time or, if no time was specified, within a reasonable time.
A business won't be in breach if the failure was due to something beyond its control, or if the business and customer can agree to a replacement rebate, gift or prize.
Examples
Offering a free gift in connection with the launch of a new line of products without telling customers that they must pay for the delivery of the gift.
Telling customers if they buy certain products, they will win a prize when all they will receive is the chance of winning the prize.
A retailer advertises that its customers will go into a draw to win a prize if they spend over $200 in one transaction. The business adds a fictional person to the draw and announces them as the winner. The result is that the prize offered isn’t given to any of the business’ actual customers. This practice is unlawful.
Claims about the future
A business that makes a claim about future matters (including predictions or projections) must have reasonable grounds for making the claim at the time of making the claim. The business is responsible for showing that it had reasonable grounds to make the claim.
You need to make sure you adequately address the range of uncertainties and variables involved when making claims about the future.
Example
A local candle business states on its website and packaging that its handmade candles will burn for up to 60 hours.
Despite making this claim, the business does not know how long the candles will burn and has not done any testing to determine whether the claim is true.
This claim is a representation about something that may happen in the future, and the business did not have reasonable grounds for making it. This claim is likely to be misleading.
Learn more about advertising techniques that can mislead.