A Legal Guide to Advertising Your Small Business

Advertising is a must to gather new customers to your small business. Like all aspects of commercial law, however, there are a number of rules and regulations that you need to follow. This post will outline 7 rules of advertising that are governed by Australian law.

Rule #1: Consumer Law

Australian Consumer Law (ACL) is the most important piece of legislation when it comes to advertising. It sets out consumer guarantees such as guaranteeing that goods are of acceptable quality, are fit for purpose, and more. For more details on consumer law, we have written a blog post all about it here.

Rule #2: Bait Advertising

Bait advertising is when businesses advertise products at deceptively low ‘sale’ prices without having reasonable grounds to believe that you will be able to supply those products for a reasonable period. It is an illegal, deceptive practice that promises customers low prices, only for them to be met with prices much higher than what was advertised. A sale may be more successful than initially expected, and you may not be able to meet the demand, and this is okay. Bait advertising only applies when you do not have the required amount of stock that common sense would oblige you to have.

Rule #3: Job Advertising

When advertising for a position in your business, you must not include false or misleading information to make the offer seem better than it is. This also means including all relevant information. Leaving out or lying about important information such as pay, workload, location and expected tasks constitutes false or misleading information.

Rule #4: Unsolicited Marketing

You must have consent before sending marketing emails and texts, and provide a simple ‘unsubscribe’ button for users to opt out. Advertising in the streets is allowed, however you may need a permit from your local council to hand out brochures, set up a stall or do any other kind of public advertising – requirements vary by council, so it is worth checking before you begin. There are also laws surrounding public nuisance; you cannot be too loud or act in ways that constitute harassment to passers-by.

After reading this information you may ask, how come certain political parties are able to spam text people during elections? Surely this counts as unsolicited marketing? The unfortunate answer is that registered political parties are exempt from the Spam Act 2003 (Cth), meaning they can send unsolicited marketing messages at any time – not just during elections.

Rule #5: Endorsements

It is a common, and perfectly legal, tactic for businesses nowadays to pay prominent social media influencers to endorse their product. There are rules around doing so, however. Both the business and endorser must clearly disclose that it is a paid promotion – for example, by using hashtags like #paidpartnership or #ad – so that consumers are not misled. The endorsement must be a genuine representation of the product that is based on the endorser’s personal experience.

Rule #6: Comparative Advertising

Advertisements are allowed to compare their goods or services to their competitors, provided that the information given is truthful, accurate and not misleading. You are allowed to highlight superior features and lower prices of your goods or services compared to your competitors, provided that those declarations are entirely substantiated.

For example, you may have seen the famous Pepsi vending machine ad. It depicts a boy standing on two Coke cans, Pepsi’s biggest competitors, in order to reach the button to dispense a Pepsi can. The ad directly used the trademark of their competitors, but the ad was perfectly legal because they did not make any unsubstantiated claims in the advertisement saying that Pepsi was of a superior quality or price to Coca-Cola.

Rule #7: Puffery vs Misleading Claims

While making misleading or deceptive claims is prohibited under the Australian Consumer Law, ‘puffery’ is a little hazier. Puffery refers to hyperbolic, subjective claims that no reasonable customer would take seriously. Examples of puffery claims include saying “our coffee is the best in the world” or “our pillows will take you to Cloud 9”. They are not misleading in the same way as claiming a pill “cures all colds”, but they are not entirely accurate claims, either.

If you have any questions about legally advertising your small business, please do not hesitate to contact me. I am here to help.

DISCLAIMER: This article is for informational purposes only and does not constitute legal advice.