Unfair business and sales practices

Introduction

There are some sales practices that are illegal for businesses to use.  

Consumers are protected against these unfair practices under the Australian Consumer Law.  

Find out more about consumer guarantees under Australian Law.

The following pages are a guide to unfair practices, including all of the following:

  • misleading or deceptive conduct
  • unreasonable or oppressive behaviour
  • country of origin claims
  • misleading pricing.

Misleading or deceptive conduct

Consumers have the right to expect that a business will not mislead or deceive them about goods and services. 

Businesses can break the law even if they didn’t mean to mislead or deceive.

Misleading or deceptive claims

A business can't make false or misleading representation about any of the following:

  • price, value, standard, age, place of origin, quality or grade of goods
  • composition style, model or history of goods
  • testimonials from people buying or using them
  • availability of spare parts
  • sponsorship, approval, performance, accessories or benefits of use
  • the need for them
  • any guarantee or warranty, or conditions on them.

It is also illegal to offer rebates, gifts or prizes without providing them or not providing them as offered.

Misleading or deceptive conduct

Misleading or deceptive conduct includes any of the following:

  • puffery - wildly exaggerated, fanciful or vague claims that no reasonable person could possibly treat seriously or find misleading
  • silence - failing to disclose relevant facts
  • bait advertising - enticing prospective customers into stores when there are reasonable grounds for believing that the goods will not be in the store or are unlikely to be available for a reasonable time at the advertised price
  • disclaimers and fine print - you cannot rely on the fine print to tell important facts to customers about a good or service, however, disclaimers are not illegal if prominently displayed and they don’t undermine the offer being made
  • predictions and opinions - these can be misleading or deceptive if you know they are false, don't care if they are true or not, or have no reasonable grounds for making them.

Go to the NT Consumer Affairs website for more information.


Unconscionable behaviour

Unconscionable behaviour does not have a precise legal definition as it is a concept that has been developed case-by-case by courts over time.

Behaviour may be unconscionable if it is particularly harsh, unreasonable or oppressive.

It must be more than simply unfair. It must be against conscience as judged against the norms of society.

Examples of unconscionable behaviour

Unconscionable behaviour includes any of the following:

  • not explaining a contract properly to a consumer that does not speak English well or has a learning disability
  • the use of undue influence, pressure or unfair tactics to induce someone to sign a blank or highly unfavourable contract
  • making false claims about the real cost of a loan
  • failing to explain key contractual terms.

Avoid becoming a victim

Be prepared to walk away from a deal that does not feel right - it could be an unreasonable or oppressive deal.

When making a deal you should do all of the following:

  • ensure all commercial agreements are in writing
  • make sure you fully understand all the terms of the transaction
  • do not sign any agreements without reading them carefully
  • ask for plain language explanations and obtain independent and professional legal or financial advice if unsure
  • if you think you are being treated differently, ask why
  • do not allow yourself to be talked into a deal that is wrong for you by high pressure sales tactics - be wary of tight decision deadlines
  • look for the best deal and try to negotiate the outcome you want.

Go to the NT Consumer Affairs website for more information.

Find out more about contracts.


Country of origin claims

This page has information for businesses about country of origin claims on goods.

You must not make false or misleading representations about the country of origin of goods.

Representing country of origin

A representation about country of origin can include words or pictures indicating that goods were made, produced or grown in a particular country.

Any words or pictures on a product must accurately represent where the produce is from.

The representation can be either:

  • attached to the goods - eg: on a label
  • or in promotional material linked to the goods.

Representations about country of origin include:

  • made in a specific country
  • product of or produced in a specific country
  • use of a prescribed logo that identifies a place of origin
  • claims that goods, or ingredients or components, were grown in a specified country.

Made-in claims

To claim goods are made in a particular country, both of the following must apply:

  • they must be substantially transformed in that country
  • 50% or more of the total cost of producing or manufacturing the goods must be incurred in that country.

Substantially transformed means the product undergoes a fundamental change. The change can be to the product’s appearance, operation or purpose.

Processes that lead to substantial transformation include all of the following:

  • processing imported and Australian ingredients into a finished food product, such as the production of a cake from imported spices, fruit and flour, and Australian sugar
  • production of a newspaper using imported ink
  • moulding sheet metal into a car panel 
  • manufacturing flour from wheat.

It does not include:

  • reconstituting imported fruit juice concentrate into fruit juice for sale - whether or not Australian water, sugar, preservatives and packaging are used
  • assembling imported components into household or other items - eg: white goods, furniture or electronic goods.

Product-of or produced-in claims

To claim goods are a product of or produced in a particular country the following must apply:

  • virtually all the production or manufacturing happened in that country
  • all of the significant ingredients or parts must come from that country.

Use of a logo

If a business labels a product with a logo such as ‘Made in Australia’ the goods must:

  • be substantially transformed in Australia
  • meet the percentage of production or manufacturing costs that apply for that logo.

Grown-in claims

A business can claim goods are grown in a particular country when:

  • at least half the total weight comprises ingredients or components grown and processed in that country
  • virtually all production or manufacturing processes happen in that country
  • each significant ingredient or significant component was grown and processed only in that country.

Pricing for businesses

This page has information for businesses about pricing goods.

Advertisements referring to price should clearly show the price at which people can buy the advertised goods. 

Special and reduced prices

You can't claim that prices are reduced from the manufacturer's recommended retail price list if the recommended retail price is not widely accepted in your trade.

It is illegal to advertise special prices and imply substantial savings when, in fact, the goods and services are normally sold at those special prices. The comparison may be misleading and deceptive as no real saving is being offered.

Advertisements must be accurate if they are offering to sell goods in any of the following ways:

  • at a reduced price
  • at a discounted price
  • a special price
  • a lower than normal price.

Small and fine print

The overall impression created by an advertisement is important. It must not be false or misleading. 

You must not use small print to correct a misleading impression created by other more prominent words.

The words ‘conditions apply’ at the bottom of an advertisement must not contradict the basic meaning of the advertisement.

For example, an advertisement would be misleading if a bold banner stated a sale was 50% off all stock, but included small print stating 'except manchester, cutlery and furniture'.

Also, a condition in very small font that appears for a very short time at the end of a TV advertisement may not be enough.

Continuous sale

It is illegal to continuously advertise goods or services at sale or reduced prices.

For example, if you regularly had a 50%-off sale over a period of time, the 50% price would be considered your normal or regular price.

Clearance, closing down and liquidation sales should all clearly distinguish imminent business closure from a mere stock clearance.

Display price

If an item displays more than one price, you must:

  • sell it for the lowest price
  • or withdraw it from sale.

The displayed price is one that is attached to, on or near the goods, or published in a catalogue.

You can’t promote or state a price that is only part of the cost unless also prominently advertising the total price.

Read about price scanning.


Proof of transaction

If you need to contact a supplier or manufacturer about faulty goods or services, you will need proof of purchase.

This is usually a tax invoice or receipt.  

This also applies if you received the goods as a gift.

Other forms of evidence

While the best proof of purchase is a tax invoice or receipt, other forms of evidence are usually acceptable, including any of the following:

  • a lay-by agreement
  • confirmation or the receipt number for a telephone or internet transaction
  • a credit card statement
  • a warranty card showing the supplier's or manufacturer's details and the date or amount of the purchase
  • a serial or product number linked with the purchase of the supplier or manufacturer’s database.

Goods valued at $75 or more

Businesses must provide proof of purchase for goods or services valued at $75 or more (excluding GST).

If the transaction is less than $75, you can ask for proof of purchase to be provided within seven days of the transaction.

Itemised bill

You can ask for an itemised bill for goods and services.

A business must give you an itemised bill without charge within seven days of the request. 

The bill must be written in plain language, legible and easily read.

You can ask for the itemised bill to show all of the following:

  • how the price was calculated
  • the number of labour hours and the hourly rate
  • a list of the materials used and the amount charged for them.

This request must be made within 30 days of whichever happens later:

  • the services are supplied
  • or the consumer receives a bill or account from the supplier for the services.

For more advice contact NT Consumer Affairs.