Here’s a summary of section 53 of the Trade Practices Act 1974 (TPA), which deals with false and misleading representations.
Contraventions of section 53 can lead to soloists having to pay damages or compensation to their clients. There are also criminal penalties with fines of up to $220,000 for an individual. However, it is unlikely that the ACCC will pursue a criminal prosecution against a business for engaging in false or misleading conduct unless the conduct is particularly blatant or the business is a repeat offender.
Section 53 of the TPA prohibits a wide range of conduct. Most relevantly for soloists, the section prohibits the following:
Falsely representing that goods or services are of a particular standard, quality, value or grade.
Falsely representing that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have
Making a false or misleading representation with respect to the price of goods or services.
To comply, soloists should be careful not to oversell their goods and services and claim that they are of a higher standard or quality than they actually are.
Pacific Dunlop fell foul of section 53 when it claimed its socks were made out of “pure cotton” when this was not the case.
Soloists should also be careful about the way they publicise the sponsorship or approval of another business.
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For example, you may have done work for a large client and state this in your marketing material or websites . But by referring to that client , you may be seen as representing that you have that client’s sponsorship and approval.
Soloists should consider getting their client’s written permission before referring to that client in their marketing material or on their website, so there can be no dispute later on.
Soloists should also ensure that they do not make a false or misleading representation about the price of their goods and services. In particular, watch out for two risky practices – advertising markdowns and failing to disclose hidden charges.
Many businesses have contravened section 53 because they claimed that a good or service which they were selling had been reduced in price by a particular amount when this was not the case.
For example, a number of jewellery businesses advertised goods as having been reduced to half price or more for a short time in an effort to encourage customers to buy those goods. However, when it was shown that these goods had never been sold at the higher price, these businesses were found to have contravened section 53.
Also, failing to advise a client of any additional charges, which they will or may incur, could contravene section 53. Soloists must ensure that they disclose all costs, such as delivery charges, taxes or other expenses, which the client will or may incur before doing any work for the client.