Trading act outlaws unintentional misleading advertising

Press, 6 March 1987, Page 5

Trading act outlaws unintentional misleading advertising

Advertising agencies had reacted “with something between dismay and horror” to possible implications of the Fair Trading Act, an industry spokesman said yesterday. The South Island president of the Advertising Institute, Mrs Christine Toner, said any advertising deemed to be misleading, intentional or not, could result in a prosecution under the act.

Although advertisers were still “feeling their way” with the new law, none she knew of had withdrawn advertising copy since it was intro-

duced on March I. Advertisers now had an increased awareness of the need to not mislead people but ultimate reactions would depend upon the public. “It is too early to say what the public reaction will be. It is difficult to know if people are going to follow things through,” Mrs Toner said..

Similar legislation in Australia had resulted in a vast number of prosecutions being brought against advertisers, she said.

Under the act, advertisers would have to “say what they mean, and

say it clearly so as not to mislead people,” she said.

“That should have been the way it was all the time, and with most advertisers it was.

“Under previous legislation you could not intentionally mislead people, but now anyone who unintentionally misleads could be culpable as well,” she said.

The new act was farreaching. It was impossible for the man in the street and advertisers to be fully informed of all its implications. She said that the act could be "over-used” to trap unsuspecting ad-

vertisers. Although the legislation was full of advantages to the consumer, it did not have to mean it was to the detriment of the advertiser.

“New Zealand advertisers have not really gone overboard in the past,” said Mrs Toner.

An advertising company director, Mr lain Clark, said the act was the most significant piece of legislation to affect consumers "for a long, long time.” It brought New Zealand into line with its trading partners and was “long overdue.”

Under the law, advertisers could not legally make a claim about a product unless they could back it up with proof. Although most advertisers followed a code of ethics, some had “slipped round the edges and been a bit naughty,” said Mr Clark. The act would force all advertisers to follow the same standards. He thought some forms of advertising would change because of the act, the most significant being the advertising of prices. A claim that a product was “usually $79.95, now $59.95” had to mean the

consumer would pay $79.95 for the product in the store at any other time. Inflating the original price was “definitely illegal,” said Mr Clark.

If limited stock of a special bargain-priced item was available, the advertising would have to say so. It was illegal to entice people into stores with the promise of bargains that did not really exist.

“If it is purely a comeon serious questions could be asked,” he said.

Non-disclosure and half-truths should be eliminated from advertis-

ing. “It would be a very, very brave man to say his stock was the cheapest. It would only take someone to drop the price as well and there could be trouble,” he said.

The act applied to all forms of advertising, including classified advertisements in newspapers. Penalties were harsh. A corporate body could face a fine up to $lOO,OOO for a breach of the act. Individuals could face fines up to $30,000.

Exaggeration, animation, and puffery were

still acceptable as long as they were obvious and not misleading. Guarantees were also covered by the act. “You might find a product that offers in big print a five-year guarantee. Then you read in small print that certain parts are exempt from the guarantee.

“That can no longer be done. Under the act, any exemptions to guarantee have to be given the same weight in print as the original claim. “A lot of guarantee cards will be reprinted,” Mr Clark said.