Advertising laws and your business

Advertising can help businesses reach potential customers, but you should be aware of some of the laws relating to advertising.

Know who your customers are when choosing a place to advertise

If you are deciding to advertise your business, you should look at your customers':

• demographics
• characteristics
• media preferences.

Your advertising options can include:

• newspapers and magazines
• radio
• television
• the internet
• posters or billboards
• direct mail
• sponsorships.

You should target your audience rather than paying a lot of money to reach people who may never be your customers.

Do not make false or misleading representations in your advertising

The Australian Consumer Law (ACL) prohibits your business from making false or misleading representations about:

• the standard, quality, value or grade of goods or services
• the composition style, model or history of goods
• whether the goods are new
• a particular person agreeing to acquire goods or services
• testimonials by any person relating to goods or services
• the sponsorship, approval, performance characteristics, accessories, benefits and uses of goods or services
• the price of goods or services
• the availability of repair facilities or spare parts
• the place of origin of a product, for example, where it was made or assembled
• a buyer's need for the goods or services
• any guarantee, warranty or condition on the goods and services
• shipping options and delivery times.

You must tell consumers the single (total) price for a product

If you include the price of a product in an advertisement, you must tell consumers the single (total) price for the product. It’s an offence to:

• state only part of the price without also displaying the total amount to be paid, including any applicable GST
• sell an item for more than the lowest marked price if there is more than one price marked
• falsely inflate the price of goods to give the impression they have been discounted or on ‘sale’.

Do not engage in bait advertising

Bait advertising involves advertising a small number of goods at low prices to entice customers to your business. When the advertised goods quickly run out, customers are shown higher-priced goods.

It’s an offence to advertise goods for sale where there are reasonable grounds to believe that you’ll be unable to supply those goods for a reasonable period.

You’re responsible for making sure that there are enough supplies available to cover a sale. You still may not be able to meet the demand, but you should have at least planned for it and have reasonable stock or offers available. This is not just common sense, it’s the law.

What is reasonable will depend on:

• the type of product
• the context of any advertisement, and
• your previous trading experience.

The period of offer should also be made clear in the advertisement. State in the advertising if an offer is available for a limited period. If stocks are genuinely limited, such as a clearance sale, say so in the advertisement or, you can supply equivalent goods immediately and at the advertised price if the customer accepts.

Check if a business name is being used

When a business operates under a name other than that of the proprietor, that name must be registered under the Business Names Registration Act 2011 (Cth).

Business names are administered by the Australian Securities and Investments Commission (ASIC).

It is against the law to give false and misleading information about job or business opportunities

It’s an offence to give false and misleading information on jobs or business ventures that:

• operate from home
• require work or require money to be invested.

The Courts have ruled that what matters is whether a job or business opportunity advertisement will mislead the average person in the street, not whether it intends to mislead. You should also be aware that leaving out significant information may cause issues. Prospective employers and employment agencies must ensure that advertisements for job offers are expressed:

• clearly
• accurately
• in definite terms.

Regulating advertising standards

Advertising Standards Bureau administers a national voluntary system of advertising self-regulation through the Advertising Standards Board and Advertising Claims Board.

The Advertising Standards Board decides on complaints about advertising in relation to:

• language
• the discriminatory portrayal of people
• concern for children, portrayals of violence, sex, sexuality and nudity
• health and safety.

The Advertising Claims Board decides on complaints to do with truth, accuracy and legality of advertising on a user pays cost recovery basis.