Section 18 of the ACL and your obligation not to mislead or deceive customers

Every time your business advertises, quotes, invoices or answers a customer enquiry, the same rule applies: you must not, in trade or commerce, say or do anything that is misleading or deceptive, or likely to mislead or deceive. That is the effect of s 18 of the Australian Consumer Law (the ACL), which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth). It is the consumer protection provision an Australian business is most likely to trip over, because it reaches far beyond advertising into pricing, packaging, sales scripts, websites, social media posts and even the things you leave unsaid.

For a small or medium business, section 18 matters for two reasons. First, it has no size threshold. A two-person online store is bound by the same standard as a national retailer. Second, a breach does not depend on bad intentions. You can contravene the section while trying your hardest to be honest, because the law looks at the impression your conduct creates, not at what you meant.

This guide covers who the obligation applies to, the five day-to-day duties it creates, what happens if you get it wrong, and the steps you can take to stay on the right side of it.

Who the obligation applies to

Section 18(1) provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Three parts of that sentence decide whether it catches your business:

No size or structure threshold: "A person" covers companies, sole traders, partnerships, trusts and individuals. There is no turnover test, no employee headcount and no exemption for hobby-adjacent sellers operating through marketplaces. If your dealings are in the course of a business, section 18 applies.
Both sides of the transaction: The section protects customers and other businesses alike. A misleading statement to a commercial buyer breaches it just as a misleading advertisement to consumers does.
The "in trade or commerce" trigger: The conduct must occur in the course of commercial activity. The High Court in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 held that an internal statement on a building site was not made in trade or commerce, even though the company was a builder. One-off private sales between individuals, and statements that are not part of commercial dealing, generally fall outside the section. If you are selling goods or services as a business, expect it to apply.

Two carve-outs are worth knowing. Conduct in relation to financial services is excluded from the ACL by s 131A of the Competition and Consumer Act, and is instead dealt with under a near-identical prohibition in the Australian Securities and Investments Commission Act 2001 (Cth). And the ACL binds you regardless of which state or territory you trade in, because each jurisdiction applies it through its own fair trading legislation, enforced by the Australian Competition and Consumer Commission (the ACCC) and state and territory consumer regulators.

Duty one: create the right overall impression

The central question is not whether you intended to mislead anyone. It is whether an ordinary or reasonable member of the audience your conduct was directed at would be likely to be misled. The High Court settled that formulation in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45, and it drives everything else about the section.

That means you must judge your marketing as a whole, the way a customer actually experiences it. A headline that promises one thing while buried fine print says the opposite is judged by the headline, because that is the impression the reasonable customer takes away. It also means you do not need to show that anyone was actually deceived. A real likelihood of misleading is enough, so a campaign that happened to fool no one can still breach the section.

What this duty requires of you in practice:

Read your ads from the customer's side: Ask what a reasonable person in your target market would conclude at a glance, not what a careful reader of the fine print would conclude.
Keep qualifications close and clear: If a claim needs a condition, put the condition next to the claim in plain words, not in a separate legalistic document.
Distinguish puffery from claims: Vague self-evident exaggeration such as "world-class service" will rarely mislead a reasonable customer. The moment a claim sounds specific or measurable, such as "fastest delivery in Sydney" or "used by 10,000 businesses", it becomes an objective claim that must be true and supported.

Duty two: say what a reasonable customer needs to know

Silence can be just as misleading as a false statement. If a reasonable customer would expect to be told something before deciding to buy, and you withhold it, the omission can breach section 18 even though everything you said was technically true.

The classic examples are significant limitations, known defects, compulsory fees and the terms that change the value of what is being offered. A plan advertised as unlimited that throttles data after a small allowance, or a warranty with exclusions that contradict its name, misleads if the qualification is hidden. The duty is not to disclose every conceivable fact. It is to make the information that matters prominent enough that the reasonable customer is not left with the wrong idea.

The practical habits that satisfy this duty:

Test your disclosures: If customers regularly miss a qualification, the disclosure is not prominent enough, whatever its legal wording says.
Match the medium: A limitation explained in a conversation may need to be spelled out on a one-page checkout screen, because the customer cannot ask the salesperson questions there.
Watch the design: Layout, colour, button labels and imagery all form part of the conduct. Highlighting a plan as "most popular" when it is not, or using a green tick to suggest a verified benefit that has not been checked, can mislead as effectively as words.

Duty three: put the price on the table

Pricing is the most common source of misleading conduct complaints, and it is where the overall-impression test bites hardest. Advertising a low headline price while adding unavoidable fees late in the checkout flow, often called drip pricing, can leave customers with a different total from the one they thought they were agreeing to.

To meet this duty:

Show the total early: Display the full price, including any mandatory fees, as prominently and as early as possible.
Treat unavoidable charges as part of the price: If every customer pays a booking fee, a service fee or a delivery charge, it is part of what the product costs, not an optional extra.
Keep "was/now" comparisons honest: A discounted price is only a genuine discount if the higher price was a real price the product was actually offered at, for a real period.

Duty four: back up objective claims

If your marketing makes a claim that sounds specific or measurable, the law expects you to have a reasonable basis for it. Claims such as "clinically proven", "removes 99% of bacteria" or "Australia's most awarded" carry an implicit promise that evidence exists, and the evidence must relate to what you are actually selling. General research on a different product, a different population or a different dosage will not support a claim about yours.

The discipline that satisfies this duty:

Keep a claims register: For every objective claim, record the evidence: lab reports, independent test results, customer surveys, awards, speed tests or competitor comparisons, with the date and the source.
Update it when the product changes: A claim that was true of last year's formulation can become misleading when the formula, the ingredients or the supplier changes.
Reframe rather than delete: If a claim cannot be substantiated, express it as a general benefit rather than a precise promise, or add a qualification that is short, clear and prominent.

Duty five: control what is said in your name

Misleading conduct does not only come from your own marketing department. It can come from a staff member answering the phone, an influencer paid to review your product, or a customer testimonial you republish.

Testimonials must be genuine: Republishing a review that overstates results, or editing it so it implies more than the customer said, can breach section 18. If a testimonial is paid for, or comes from someone with a connection to you, that connection should be disclosed.
Brief your team: Front-line staff and contractors can create risk with a single off-hand claim about what a product can do. Clear scripts, training and an escalation path for hard questions reduce that risk.
Set expectations with affiliates and creators: Marketing agreements should require truthful content and disclosure of the commercial relationship, and someone should monitor what is actually published.

What happens if you get it wrong

Section 18 itself is not a pecuniary penalty provision, so the ACCC cannot seek a fine for a bare contravention of it. That is a common source of false comfort, because the consequences around it are substantial.

The courts can order a wide range of remedies for a contravention of section 18: injunctions to stop the conduct, damages for loss suffered, compensation orders, corrective advertising orders, declarations and, in some cases, redress for consumers who were not even parties to the proceeding. A damages claim under s 236 of the ACL can be brought by anyone who suffered loss because of the conduct, and must be commenced within six years of the loss. The ACCC can also accept court-enforceable undertakings, which are a common early outcome in its investigations.

The larger exposure comes from the provisions that sit alongside section 18 and do carry penalties. The false representation rules in s 29 of the ACL, which cover claims about quality, price, testimonials, sponsorship and warranties, attract pecuniary penalties under s 224: for a body corporate, the greater of $100 million, three times the benefit obtained from the conduct, or 30% of adjusted turnover during the breach period, and up to $2.5 million for an individual. Much misleading conduct breaches section 18 and section 29 at the same time, and the regulator is entitled to pursue both. Add the cost of corrective advertising, refunds, legal fees and the damage a public enforcement action does to customer trust, and the real price of a misleading campaign is usually far higher than any single figure suggests.

A practical compliance checklist

Run through this checklist regularly, and always before a new campaign goes live:

Map your customer-facing content: List every channel: website, landing pages, emails, SMS, social posts, video ads, sales scripts, packaging, invoices and checkout screens.
Audit the high-risk pages first: Home pages, pricing pages, hero claims and paid ads are where misleading impressions are most often created.
Check pricing flows end to end: Place a test order and confirm the total matches the advertised price at every step.
Verify your three biggest claims: Pick the specific-sounding claims you rely on most and confirm the evidence for each is current and on file.
Review design as well as words: Ask what impression a customer would take away from the layout at a glance, and fix disclosures that are routinely missed.
Train anyone who speaks to customers: Front-line staff, affiliates and influencers all need to know what they can and cannot say.
Have a sign-off process: A second pair of eyes, preferably someone not involved in the creative work, should review new campaigns before they launch.
Respond to complaints promptly: If a customer says they were misled, investigate, fix the source and consider a fair remedy. If the ACCC contacts you, pause the conduct in question, preserve records and get advice before responding.

When a lawyer can help

Most of this duty is about good business habits, and most businesses can build those habits without legal help. A lawyer earns their keep at the edges: reviewing a campaign before launch, advising whether a specific claim has a reasonable basis, responding to an ACCC enquiry or substantiation notice, and defending or bringing proceedings. If your business relies on bold performance claims, aggressive pricing or a large volume of user-generated reviews, an early review of your marketing is cheaper than correcting it after a regulator takes an interest.

The false comfort of "no penalty"

The single most dangerous misconception about section 18 is that it carries no fine, so a breach is a low-stakes problem. That reading misses three things. The remedies available for a contravention, including damages and corrective advertising, do not require any penalty to be imposed. The specific prohibitions that sit alongside section 18, particularly the false representation rules, expose your business to penalties in the hundreds of millions of dollars on paper. And the regulator's choice of which provision to pursue is not something you control. The practical upshot is that the duty not to mislead is a compliance obligation with real teeth, even though its headline provision is technically penalty-free.

The first step this week is to pick the three specific-sounding claims your business relies on most heavily, whether on your website, in your ads or in your sales script, and confirm the evidence for each is real, current and written down. If you cannot find the evidence, reword the claim before a customer or a regulator finds the gap for you.