Misleading ads: is the form relevant?

The Federal Court decision in Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 is of value because it considers the difference between flyers, printed, television and online ads and billboards and whether or not defects in an ad can be corrected by scripts in the point of sale process and on the website.

The case concerned Optus’s ads for its Think Bigger broadband plans. The Judge agreed with the ACCC that Optus failed adequately to disclose that the speed for both peak and off-peak usage would be limited once the peak usage was reached. A sample of the ad is at the end of the judgment.

But other ACCC complaints were rejected because of Optus submissions regarding the marketing process and how consumers formed impressions and made decisions.

The following observations of Justice Perram are useful:

In analysing the small print disclaimer at the bottom of the ad: “The density of the previous sentence and the sheer number of intellectual balls which need to be kept in the air to understand it strongly tell against its correctness…it would only be exceptionally gifted individuals who would grasp the full import of those words on first seeing them in the advertisement. Viewed in isolation at the moment of its delivery this advertisement plainly misleads consumers into thinking that they will receive 150GB of broadband when they are getting no such thing unless they assiduously ensure that they exhaust all of their off-peak usage allowance before exhausting their peak usage allowance.”

On the effect of point of sale corrections: “Nor, contrary to Optus’ submissions, is the misleading nature of the advertisement reduced by the statements Optus makes, or seeks to have made on its behalf, at the point of sale. … it is an error to ask whether consumers who purchased the product were misled. This is for practical reasons set out above – the capacity of the advertisement to induce people to begin dealing with Optus (rather than others) without necessarily closing the transaction – and also for the textual reason that s 52 simply does not contain any limitation about what it is that consumers must be misled into doing to contravene the prohibition. Accepting in Optus’ favour that some kinds of statements were made to consumers through the sales process and website this does not undo, in this case, the plainly misleading and deceptive nature of the advertisement. In that regard, I have found the evidence about the traffic across the website of little utility. For completeness, I reject also Optus’ contention, based on its survey evidence, that the time taken by consumers to make broadband purchasing decisions and their reliance upon on-line and other forms of research means that the advertisement should not be seen as being misleading. This is largely for the reasons already given – it gives no weight to the initial inducement the advertisement provides to head down the path with Optus and puts at nil the negative consequences for consumers and competitors alike of that form of enticement. Of course it is true that the purchase of a broadband plan is a substantial purchase rather than an impulse purchase although even that fact was kept in fairly small print at the bottom of the page. But even so, this is not sufficient to overcome the very misleading nature of the principal message.”

Is the format of the ad relevant?: In the case of the Think Bigger advertisements…the Commission takes aim not only at a series of television commercials but also at certain print advertisements, flyers, on-line advertisements and a billboard promotion. Each form of medium, of course, presents its own subtleties in terms of gauging whether an advertisement is misleading or not. Less attention is generally paid by the public to a billboard commercial than to a television commercial and that kind of commercial, in turn, generally receives less attention from consumers than do some on-line commercials. These general observations have some truth, however, only because people do not stare at computer screens in quite the same way in which they stare at television screens and also because most people do not stare at billboards at all. Generalisations in this field are, however, difficult to justify because the nature of any particular advertisement is such a significant variable in the calculus of deception. Some television commercials are quite transfixing and, by the same token, many on-line advertisements are tedious and are readily ended with a simple click. The central principle is that each advertisement must be considered in the context of the medium in which it is expressed taking full cognisance of the different consumer experiences arising with different media. Much beyond that it is difficult to go. ..In this case, however, I do not think that the kind of subtleties raised by those issues need be dwelled on for long. The core of the Commission’s complaint ranges across all of the advertisements in all of the relevant media but is the same. ”

All forms of ads were found misleading.

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