Misleading and deceptive conduct in NSW, what the law requires of your business

If you sell goods or services in New South Wales, you are under a legal obligation that sounds simple but catches businesses out every year: you must not, in trade or commerce, engage in conduct that is misleading or deceptive, or is likely to mislead or deceive. That is the rule in s 18 of the Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth). It reaches further than you might think. It covers your advertising, your pricing, your website, your sales conversations, your contracts, your social media posts and even the things you leave unsaid.

Two things make this obligation different from many others. First, there is no exemption for small businesses. The ACL applies to every person in trade or commerce, from a sole trader selling on a marketplace to a national retailer, and it applies whether your customer is a consumer or another business. Second, you do not need to have intended to mislead anyone. A genuine mistake can still be a breach. This guide sets out who the obligation applies to, the five duties it creates in practice, what happens if you breach it, and where a lawyer can help.

Who the obligation applies to

The obligation applies to any person acting in trade or commerce. In New South Wales it is given force by s 28 of the Fair Trading Act 1987 (NSW), which adopts the ACL as a law of this state, known as the Australian Consumer Law (NSW). Section 32 of that Act extends it to people carrying on business in NSW, companies incorporated or registered here, and people ordinarily resident here, and it can reach conduct that happens partly outside the state. The practical effect is that if your business is in NSW, or sells to customers here, the ACL applies to you.

There is no turnover threshold, no minimum headcount and no small business carve-out. The only real limit is the phrase "in trade or commerce". A private sale between individuals falls outside it, but almost any commercial activity falls inside it, including business to business sales, free trials that lead to paid services, and fundraising that involves selling goods. The obligation also attaches to individuals, not just companies. A director or salesperson who personally makes a misleading representation can be exposed in their own right.

Duty 1: Judge every message against the impression it creates

The first duty is to look at each advertisement, web page, email, script or label as a whole and ask whether the overall impression is accurate. Australian courts ask whether the conduct would lead an ordinary, reasonable member of the intended audience into error. That standard comes from the leading authority, Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. The audience matters: a claim aimed at consumers is judged against what a reasonable consumer would take from it, not what a specialist would.

The whole of the conduct is considered, not isolated sentences. In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, the High Court treated a television advertisement as a single message and found that prominent claims of an unlimited broadband plan for $29.99 were misleading because important conditions appeared only in fine print at the bottom of the screen. The same logic applies to your website: a bold headline claim with conditions buried in a footer is judged by the impression the headline creates.

Silence can breach the duty too. In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546, the Federal Court found that the seller of a restaurant business had engaged in misleading conduct by saying nothing about a seating limit imposed by its licence, even though the buyer had not asked. If you know something material that would change a customer's decision, such as a known defect, a capacity limit or a condition that applies to an offer, staying silent can be a breach even when everything you did say was true.

Because the test is the impression created, intention is irrelevant. An honest misstatement, an outdated price or a template email that was never meant to mislead can all breach s 18. That is why the practical work is reviewing what you publish before you publish it, not just resolving to be honest.

Duty 2: Keep specific claims accurate and backed by evidence

Section 18 is the general rule. Section 29 of the ACL then names specific representations you must not make falsely, including claims about the standard, quality, value or grade of goods or services, whether goods are new, testimonials, sponsorship or approval, price, the availability of repairs or spare parts, place of origin, and the existence or effect of any warranty, guarantee or refund right. A false representation about any of these matters can be prosecuted as a strict liability offence, meaning a prosecution does not require proof of intention or recklessness.

Testimonials get their own treatment. Under s 29(2), a representation that purports to be a testimonial is presumed to be misleading unless the business can show otherwise. If you publish customer reviews, they need to be genuine, and if you pay influencers or affiliates, their posts should disclose the paid relationship and not exaggerate what your product can do.

Substantiation is the discipline that keeps you out of trouble. If you claim "delivered in 24 hours", "80% stronger" or "the best price in Sydney", you should be able to point to data, testing or a documented process that supports it. If you cannot, the claim is a risk. Sales scripts, automated messages and template responses deserve the same review as advertising, because they make representations too.

Duty 3: Show the real price, prominently and up front

Pricing has its own rule. Under s 48 of the ACL, if you advertise one component of the price of consumer type goods or services, you must also state the single price, the total the customer will actually pay, prominently and as a single figure. Advertising a monthly fee while adding a mandatory booking fee at checkout, a technique called drip pricing, is the classic breach. The same applies to "from $99" offers where nothing can actually be bought for $99, or where compulsory charges take the real price well above the advertised figure.

The discipline is to work out the total price before you publish and show it clearly. If a condition genuinely limits an offer, such as "first time customers only" or "metro Sydney only", put it next to the claim it qualifies rather than in a terms page. The overall impression test applies to price advertising just as it does to anything else, so a technically accurate price can still mislead if the way it is presented suggests something cheaper.

Duty 4: Honour consumer guarantees and say so honestly

Consumer guarantees under Part 3-2 of the ACL cannot be contracted out of. Section 64 makes any term that excludes, restricts or modifies the guarantees void. That is why a blanket "no refunds" sign, or similar wording in your web copy or terms, is more than bad customer service. It is a false representation about the existence of a right or remedy, which s 29(1)(m) prohibits, and it contradicts the guarantees the customer keeps regardless.

Your refund policy should describe what the law actually requires, not what you would prefer to offer. Set a fair process for handling returns and complaints, train your staff to apply it, and keep the wording of your policy consistent with your terms of trade and your marketing. A policy that promises more than you deliver misleads in one direction, and one that promises less than the law requires misleads in the other.

Duty 5: Build compliance into how you work

Compliance is built into the way you work, so make these practices routine:

• Substantiate claims: keep an evidence file for every factual claim you make in ads, on your website or in sales scripts, with the data, test results or procedures behind it.
• Review before publishing: have someone who did not write the copy check the overall impression of each campaign before it goes live.
• Keep materials current: update prices, inclusions, stock levels, timeframes and guarantees whenever they change, and retire old offers and landing pages.
• Train your team: anyone who sells, markets, posts on social media or answers customer enquiries should know the basics of s 18 and s 29.
• Review your website and checkout: show the total price and key conditions clearly, and avoid design choices such as pre-ticked add-on boxes that nudge customers into decisions they did not make.
• Keep records: save drafts, approvals and the evidence behind key campaigns so you can reconstruct the basis for a claim if a question arises.

What happens if you get it wrong

A breach of s 18 does not carry a pecuniary penalty. The exposure comes from the remedies courts can order. A person who suffers loss because of misleading conduct can sue for damages, courts can make compensation orders for affected customers, order injunctions to stop the conduct, and make other orders to redress the loss, including disqualifying directors from managing corporations. For a business, the practical cost is often the defence of a claim, the correction of the conduct, and the reputational damage.

The specific representations in s 29 are a different matter. Contraventions attract pecuniary penalties under s 224 of the ACL of up to $100 million for a body corporate, or three times the benefit obtained, or 30 per cent of adjusted turnover, and up to $2.5 million for an individual. The same conduct can also be prosecuted as a strict liability offence under s 151 of the ACL, with fines on the same scale.

Two regulators enforce these rules. The ACCC acts at the Commonwealth level, and NSW Fair Trading enforces the Australian Consumer Law (NSW) under the Fair Trading Act 1987 (NSW). Their tools range from court proceedings and enforceable undertakings to infringement notices. Complaints from customers, competitors and other businesses can each trigger an investigation, so the first response to a complaint matters.

A working compliance checklist

Work through this checklist before any campaign, price change or new offer goes live:

• Read your ads, landing pages and scripts as a first-time customer would, and judge the overall impression, not individual sentences.
• Keep evidence for every factual claim, from delivery times to performance claims.
• Show the single total price prominently wherever you advertise a price.
• Put key conditions next to the claim they qualify.
• Remove "no refunds" wording and set a refund process that matches the consumer guarantees.
• Keep testimonials genuine, disclose paid relationships, and do not suppress legitimate negative reviews.
• Make your terms of trade, website terms and refund policy consistent with your marketing.
• Log complaints and corrections, and review the pattern.
• Train staff and keep an approval process for promotions and price changes.

When you need a lawyer

Most compliance work is internal, but there are moments when legal advice is worth the cost. Get advice before launching a campaign built around a bold claim or a complex price structure, when drafting or updating terms of trade, warranties and refund policies, and the moment a regulator contacts you. If the ACCC or NSW Fair Trading writes to you, respond on time and be transparent, but take advice before you respond. A lawyer can review your materials against the overall impression test, check that your claims are substantiated, help you prepare a response to a regulator or a complaint, and give you a realistic view of your exposure if a breach has already happened.

The duty that trips businesses up is the one they do not see

The breach that catches most businesses is not the bold lie. It is the omission: the condition buried in fine print, the outdated price still live on the website, the material fact left unsaid in a sales conversation, the headline that is technically true but leaves the wrong impression. Because intention does not matter, good faith offers no protection. The fix is a habit, not a document. This week, pick one live advertisement or landing page and read it as a stranger would, noting what is left unsaid and what a reasonable customer would conclude. If the answer is anything other than the truth, change the page before a customer, a competitor or a regulator notices.