Beware of misleading and deceptive conduct in advertising

Real estate agents will inevitably make representations to attract potential clients (sellers or Lessors), buyers and/or tenants. These representations may include the features of the property in order to attract potential buyers or tenants, or the services an agent provides in order to attract potential clients.

However, extreme care must be taken by agents to ensure that all representations are accurate and will not fall foul of the consumer protection legislation.

Section 18 of the Australian Consumer Law  (ACL)prohibits conduct, in trade or commerce, which is misleading or deceptive, or is likely to mislead or deceive. Misleading and deceptive conduct is a broad concept which includes words, actions and pictures. It is irrelevant whether there is an intention to mislead; what is relevant is the overall impression created by the conduct and its actual or likely effect on the target audience.

When advertising the services an agent provides in order to attract potential clients, it is important that the agent does not make false or misleading claims about the quality, value, price or benefits of the service.[1] The methods used by agents when advertising their services require consideration as to whether any statements made are incorrect or likely to create a false impression.

Bait advertising

Section 35(1) of the ACL provides that a person must not, in trade or commerce, advertise goods or services for supply at a specified price if:

1. there are reasonable grounds for believing that the person will not be able to offer for supply those goods or services at that price for a period that is, and in quantities that are, reasonable, having regard to:

   • the nature of the market in which the person carries on business; and

   • the nature of the advertisement; and

2. the person is aware or ought reasonably to be aware of those grounds.

Further, Article 9(c) of the REIQ Standards of Business Practice (the Standards) provides that members must not engage in bait advertising.

Testimonials and reviews

Testimonials and reviews are often used by agents to promote their services in order to attract potential clients.

If using testimonials or reviews to promote a service, regardless of the platform used to advertise, agents must ensure that the testimonial or review accurately reflects the views of the person who provided it. It goes without saying that the use of a fake review or testimonial is likely to mislead or deceive and be in breach of section 29 of the ACL.

Agents should also be mindful of Article 9(a) of the Standards, which provides that members must not make false or misleading representations or statements about properties or businesses, or engage in any conduct which is likely to mislead or deceive, including representations or statements about the values of properties or businesses, the features of properties or businesses or any other matter that is material to the sale, purchase or lease of a property or business to a client or consumer.

SEE ALSO: 'Offers over' price tag should represent the vendor's minimum selling price

Comparative advertising

In circumstances where comparative advertising is used to promote the superiority of an agent's services over his or her competitors, care must be taken to ensure that:

1. the comparison being made is accurate; and

2. the services being compared are reasonably similar.

Agents must also consider how long the comparison will remain accurate for.

In addition, Article 7 of the Standards should be considered by agents at all times when preparing advertisements with reference to competitors. Article 7 provides that a member must not make false, derogatory or unprofessional comments (in writing or verbally) about another agent or member in order to seek a commercial advantage of some kind and/or cause a client to terminate or not renew another Appointment. If a member makes false, derogatory or unprofessional comments about another agent or member, the member who made the comments must, within 5 business days:

(a) take all reasonable steps necessary to retract such false, derogatory or unprofessional comment; and

(b) provide the other agent or member with a written apology, and undertaking to withdraw such comment.

Consequences

With respect to claims for breaches of section 18 of the ACL, damages will be calculated pursuant to section 236. The calculation of damages pursuant to section 236 entirely depends upon the particular facts of the case, but is designed to compensate the injured person, in whole or part, for the loss or damage caused by the prescribed conduct.

In accordance with section 224 of the ACL, a pecuniary penalty may be imposed for a contravention of section 35 of the ACL regarding bait advertising.

Conclusion

Agents must be vigilant in ensuring that they comply with their legislative obligations when advertising the services they provide in order to attract potential clients. When preparing advertisements, agents should ensure that:

• they only provide current and correct information;

• the overall impression of the advertisement is accurate;

• any important limitations or exemptions are noted in the advertisement; and

• they support claims (e.g. the price achieved for the sale of a property) with facts and documented evidence where necessary.

Agents should also be prepared to correct any misunderstandings and have sufficient evidence available in order to substantiate any claims made in an advertisement.

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