The 4 Step Process For Determining If An Ad Is Misleading

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Businesses need to take care when advertising their products and services to avoid being deemed misleading and deceptive. Failure to do so can lead to significant penalties.

Examples of misleading advertisements could be putting important information into the fine print of the terms of service or making a misleading claim about the product’s capabilities.

Businesses should consider implementing a four-step process for determining whether an advertisement is misleading:

  1. Identify the ‘dominant message’ or ‘headline claim’ of the advertisement
  2. Determine whether the dominant message, without any qualification, conveys a misleading impression
  3. If it would be misleading, identify whether the advertisement also contains any qualification or condition which corrects the misleading impression given by the dominant message
  4. Consider whether the qualification or condition is given sufficient prominence in the advertisement so that an ordinary and reasonable consumer would notice the qualification and be disabused of the misleading impression from the dominant message.

The final step requires people to use their common sense and judgement in determining whether the advertisement is misleading.

In some cases, businesses deemed to be advertising in a misleading manner may be taken to the High Court by the Australian Competition and Consumer Commission.

When the High Court considers misleading conduct, it takes into consideration a variety of factors, including

  • the extent to which the dominant message is misleading
  • the nature of the product being advertised
  • the nature of the target audience of the advertisement
  • the medium in which the advertisement is placed.
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