30 AUGUST 2012
In a recent decision, the Federal Court ordered the largest builder of residential homes in Australia to pay $800,000 (among other penalties) after concluding that some of its advertising and promotional material was false and misleading. The decision is a timely reminder to businesses of the need to carefully scrutinise its advertising material before release, to avoid the risk of heavy fines and adverse publicity.
Some of the problems with the promotional material of Metricon Homes Qld Pty Ltd were:
1. house designs were shown with photographs of features that were either not available from Metricon at the stated price or not available from Metricon at all (e.g. swimming pools and Bali huts);
2. “build time guarantees” were offered which included compensation for purchasers for their rental costs if the guarantees were not met. These guarantees were found to be subject to terms and conditions which in effect meant that they did not apply to the majority of houses offered;
3. price discounts during the promotional period were advertised, however it was found that the houses were either never even offered for supply by Metricon before the promotion, or had not previously been offered at the pre-discount price; and
4. an “Upgrades Package” was advertised which included additional features and fittings at certain prices. It was found that Metricon misled consumers about the cost savings of the Upgrades Package.
What the Federal Court’s decision means for businesses is that all advertising and promotional material must be critically scrutinised prior to release, to ensure it is not likely to mislead or deceive consumers. This applies not only to statements that are proposed to be made in the material but also to photographs that are intended to be included.
If you are unsure about whether an intended advertisement or promotional material is likely to mislead or deceive, we would be pleased to review and advise you on that material prior to its release.
You are a valued Kinneally Miley contact, for more information related to this Legal Update please contact us.
[contactsbox] [leftcolumn]Contact Partner: Francesca Petroccitto
Direct Telephone : 07 3210 5771
Mobile Telephone : 0402 293 644
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