In today’s era of online shopping, consumers have access to thousands of options for spending their hard-earned cash. In response, businesses are constantly pitching new bargains and saving schemes to entice customers.
“Free Shipping for Orders Over $99”
“30 Day Trial or Your Money Back”
“20% OFF until Midnight with Code: THANKU”
“We’ll Beat the Competitors by 10%”
While it is true that consumers love a good deal, businesses should be cautious about the promises they make. Not delivering on promises is a steep risk, as it leaves businesses liable under Australia’s Consumer Law for making misrepresentations.
Under the Australian Consumer Law (ACL), it’s unlawful for businesses to make false or misleading representations about their products or services. This includes all statements made when marketing your business. In other words, if you advertise a deal, you have to follow through.
Businesses should also be aware that a representation can be misleading, even if it’s partly true.
Examples of the types of false and misleading statements that businesses should be careful not to make, include:
- the standard, quality, value or grade of products or services;
- the composition style, model or history of products;
- whether the products are new;
- testimonials by any person relating to products or services;
- the sponsorship, approval, performance characteristics, accessories, benefits and uses of products or services;
- the price of products or services;
- the place of origin of a product – for example, where it was made or assembled;
- a buyer’s need for the products or services; and
- any guarantee, warranty or condition on the products or services.
While the competitiveness of the online market may tempt you into making all sorts of statements you think will draw in customers, making promises you cannot keep can be expensive mistake. One Queensland business owner can attest to that, after being ordered to pay almost $10,000 for his misleading marketing.
Online marketing blunder
A recent Queensland decision demonstrates to business owners just how risky making empty promises can be. In June 2019, Marcel Shears, the owner of two online lingerie stores, was fined $8,000 and ordered to pay more than $1,643 in compensation, for making false or misleading representations and failing to supply goods.
Mr Shears had advertised on his Isabella Passion online store, that orders placed before 3pm would be sent out that day and delivered the following business day, or, within two to five business days for regional areas. However, the goods were not delivered in time with this promise, and Mr Shears failed to offer a refund. In fact, the terms and conditions of Isabella Passion stated that refunds were not available – a clear contravention of the ACL.
Further, the terms and conditions claimed that purchases over $49, $50 or $100 would include free shipping. Yet customers were still paying a $5 delivery fee.
For Mr Shears’ broken promises, in regard to the Isabella Passion store, the Court ordered him to pay a $6,500 fine and $1,643 in compensation.
Mr Shears was also ordered to pay a $1,500 fine in relation to his second online store, Blush Bras and Lingerie, after Mr Shears failed to supply $303 worth of goods to a customer.
The fines Mr Shears received, reflected the Court’s desire to deter other online businesses and protect unsuspecting customers. The Court was essentially warning online businesses to be truthful about the promises they make. The Office of Fair Trading has also declared its determination to keep pursuing businesses that take advantage of consumers.
Mr Shears’ story also serves as an additional reminder to make sure the terms and conditions you display on your website are lawful and accurate.
The boring yet necessary – T&Cs
Most online business owners are aware they should probably display basic terms and conditions and privacy policies on their websites. What they may not be aware of though, is just how important they become when businesses find themselves in a contractual dispute, such as the one above. If Mr Shears had a set of carefully constructed terms and conditions, he would be in less of a pickle than he is now.
However, it’s important to flag that your online terms and conditions must still be in line with the ACL. Most good terms and conditions would actually contain a clause that severs any other term a court would consider a contravention of the ACL.
Ultimately, while they may seem like the most boring part of building an online business, they are an important foundation for protecting yourself. You should consider including the following terms in your terms and conditions:
- terms regarding payments – currency, GST, etc;
- terms governing refunds, returns and exchanges, or cancellations – make sure these are lawful;
- terms regarding shipping;
- a term stating the governing law;
- limitation of liability terms;
- terms regarding intellectual property rights (if applicable); and
Making sure your terms and conditions are up to scratch can be difficult when they can seem like a set of legal mumbo jumbo. If all you see is legalese, it could be worth your while to seek legal help in preparing them, so you don’t end up exposed to ACL litigation, like Mr Shears.
And for a limited time, if you hire us to write your online terms and conditions, we’ll throw in a free ….