The CPA requirements of fair & responsible marketing

This is Part 3 in a 6 part series: click here to read Part 1 and Part 2.
Before I embark on this article, let me remind you what we are talking about:
  • ‘Marketing’ is defined as inclusive of ‘promote and supply’
  • ‘Promote’ means (amongst others) to ‘advertise, display, offer‘ or to induce a potential customer to enter into a transaction
  • ‘Supply’ includes to ‘sell, rent, hire’ goods or to actually perform a service or to arrange for it to be provided included providing access to a premises, e.g. fun fair, hotel or restaurant.
So the ‘net’ of accountability if thrown far and wide entailing the entire sales process (or what I refer to as ‘The Critical Transactional Path’ – ‘the CTP‘) AND so much so that an actual sale does not have to take place as the CPA refers to/includes ‘an attempted inducement‘!
The CPA deals with this aspect in Part E sections 29 to 39 and I will only focus on 3 key clauses – certain of the clauses you need to be specifically aware of and which justifies independent perusal are the sections on and loyalty programs (35) and competitions (36), the latter being very restrictive and must be prescribed reading for any party involved either as organizer or sponsor.
What does ‘fair’ and ‘responsible’ mean? Other than linking this section to section 41 (which I will deal with shortly), the law of interpretation requires you to give words their regular, common and every day usage meaning. I will thus apply these terms  as meaning the following: ‘fair’ means ‘just; equitable; fair minded; honest; honourable’ (Google), and ‘responsible’ means ‘accountable; answerable’ (Google).
So what impact does section 41 (), included here by reference, have on the interpretation of fairness? It deals with ‘False, misleading and deceptive presentations’ thus the concept of fairness. It states that presentation (‘word or conduct’ ) falls foul of the CPA if it meets one or more of the following criteria:
  • directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer; 
  • use exaggeration, innuendo or ambiguity as to a material fact,;
  • fail to disclose a material fact if that failure amounts to a deception; or
  • fail to correct an apparent misapprehension (Google: ‘mistaken belief’ on the part of a consumer, amounting to a false, misleading or deceptive representation, or permit or require any other person to do so on behalf of the supplier.
As you can see any ‘misstep’ in the CTP can very easily amount to any one or more of the above. The courts used to allude to some of the concepts contained above as so called ‘puffery’ (Google: ‘exaggerated or false praise’) and thus not forming part of the transaction – the CPA has of course changed all that.
So having set the stage, what does section 29 require of business? It sets the ‘General standards for marketing’ and this entails NOT doing so in a manner that is ‘false and misleading as contemplated in section 41’ as discussed above. How often have you not come across some form of ‘innuendo’ e.g. even the packaging (wording and/or shape) can have impact on choice of purchase!
Section 29 furthermore advises that such actions must also/or not be ‘misleading, fraudulent or deceptive’ regarding any material aspect of the goods or services including any of the following:
  • the nature, properties, advantages or uses of the goods or services;
  • the manner in or conditions on which those goods or services may be supplied;
  • the price at which the goods may be supplied, or the existence of, or relationship of the price to, any previous price or competitor’s price for comparable or similar goods or services;
I will briefly deal two other sections namely 30: Bait Marketing and 32: Direct Marketing. The former is something all shoppers are familiar with and it is associated with the ‘loss leader’ concept i.e. get people into the store for a popular product to induce further sales of other (often unrelated/unintended) purchases. The CPA requires that such goods must be available at the advertised price but it may be subject to specified limitations, both of which must not be deceptive.
Section 32 requires the supplier to advise the purchaser that the transaction may be cancelled as provide for in section 16 (i.e. within the 5 day cooling off period), read with section 20 (reasonable penalty). This means if your purchase has been induced by direct marketing (i.e. when the supplier approaches the customer), you can cancel as aforesaid.
Let’s look at some real examples of marketing that transgress the CPA.
The use of misleading green images or names
Beware: this is probably THE most common trick! Keep an eye out for pictures of trees, leaves and other such nature scenes on labels that make no other claims to eco-friendliness. Just because there’s an animal and a bit of greenery on the label doesn’t mean the company is making the environment a priority, nor do names or labels like ‘Organix’ ‘Green’, ‘Bio’ , ‘Enviro’ or ‘Eco’ before a name or brand. Check the label!
1. Would you guess these were loaded with chemicals?
See here for more.

 

 

 

 

 

 

2. Kauai Coffee Pods – single serve compostable k-cup alternatives!
Finally! The solution we’ve all been waiting for! In my opinion, this example of greenwashing; Kauai claimed it’s coffee pods were “100% compostable” but failed to mention to consumers that they can only be composted in industrial facilities that are few and far between. This constitutes as greenwashing because Kauai specifically marketed a green alternative without providing all the information necessary to actually help the environment.

 

 

 

 

 

3. Starbucks new sippy cup
Starbucks is the largest food and beverage company so far to jump onto the latest feel-good environmental bandwagon: banning plastic straws. It will substitute sippy-cup lids and alternative-material straws at its 28,000 company-operated and licensed stores, which it estimates will eliminate more than 1 billion plastic straws per year from its operations.
CEO Kevin Johnson called it “a significant milestone to achieve our global aspiration of sustainable coffee, served to our customers in more sustainable ways.”
The only problem is that the sippy cup toppers and some of the replacement straws are also made of plastic. While the new lids are recyclable, they actually weigh more than the straws they’re replacing. So in effect, Starbucks is using more plastic than it was before. (Read more about this story here.)

The next insert will address fair and honest dealing. Click the below link to read it now:
The CPA requirements of fair & honest dealing
DISCLAIMER – Each case depends on its own facts & merits – the above does not constitute advice – independent advice should be obtained in all instances.
By ADV LOUIS NEL, aka Louis-THE-Lawyer
CLICK HERE to find out more about the author, Louis-THE-Lawyer.

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