[EP 027] Legal Traps in Marketing 101

Hi, it's Joanna Oakey here and welcome back to Talking Law. Today we are talking about the legal traps in marketing. The top five things that you need to be mindful of when marketing your business or product.


Top #1: Misleading or Deceptive Marketing

First trap, number one – is your marketing misleading or deceptive?

In Australia, we have legislation called the Australian Consumer Law, which prohibits an organization from engaging in misleading or deceptive conduct. And it’s actually the best known and most litigated provision in the Australian Consumer Law in Australia.

What if you’re based overseas? Well, you can be fairly certain where ever you’re based that the jurisdiction that you are based in will have laws that are similar to Australian Consumer Laws in relation to preventing misleading or deceptive conduct.

So why avoid misleading and deceptive conduct?

Other than the obvious that you’re in breach of legislation and exposing yourself to large fines, you’re also at risk of refund requests, chargebacks and just plain unhappy customers. So looking at your advertising and marketing efforts before you press post or send them out is a very sensible thing to do.

Large organizations generally have access to lawyers who conduct what’s called marketing clearance exercises and they review marketing materials before they’re published to ensure that they aren’t contrary to misleading and deceptive conduct legislation and other similar legislation. But often in small businesses, we don’t have access to this team of people to review content that we’re putting out into the marketplace. So it’s particularly important that people who are dealing with content for our organizations and posting content for our organizations are aware of the elements of what might make some of the information that we’re posting considered to be something that is misleading or deceptive.

Things that are less commonly understood to be potentially misleading or deceptive:

Sometimes elements that are misleading or deceptive are pretty obvious. Say for example over the top marketing campaigns or marketing claims. It’s easy sometimes to go a bit over the top when people have their sales hat on. So it’s always about looking at the elements that you are claiming in relation to the goods or services that you’re providing and making sure that they are true and that they have an element in them that you can prove. If you can’t prove it, don’t say it. But some things that maybe are less commonly understood to be potentially misleading or deceptive are some of the following:

  1. Special price offers. If you’re saying that your products or services are being sold currently at a special price and your leading customers to believe that they might be making a substantial saving when in fact you have never offered the product or service for the original price, this is something that might be considered to be misleading or deceptive or probably would be seen to be misleading or deceptive. So be really careful about those special price offers. Make sure you’re not indicating that you did used to charge a certain amount for this good or service that is now discounted.
  2. Another issue can be non-stop sales. When for example you advertise your products as being on sale but they are never off sale. This will be seen that in fact the sale price is the regular price and the word sale therefore is misleading and deceptive.
  3. Bait advertising is the name that’s given to advertising at a sale price when there is reasonable grounds for you believing that the goods aren’t available or only available in very limited quantities. Sometimes this type of approach is used when there are very small quantities or sometimes none at all to lure in customers hoping that they’ll purchase more expensive products. So you need to be clear about the terms of your offer. If you really only have got a limited supply of a particular type of good or service that you’re providing at a sale price then make it clear that you’re only offering it for a particular period or a reasonable period or that you are limited to a particular quantity. So that people who are responding to the advertising understand that it’s possible in responding that they may not qualify in time to get the offers that have been advertised. So it’s really important to make the terms and conditions that relate to what you are advertising very clear together with your marketing.
  1. And finally the last area that we’re going to talk about today are fake testimonials and price comparisons. So I think the lesson in relation to this area of misleading and deceptive conduct is to keep your reasonable hat on as you’re preparing your marketing material or reviewing your marketing material if you have someone else preparing marketing material on your behalf, and ensure that things that you say are able to be proved. If you can’t prove it then don’t say it and avoid the temptation to march into the realms of over the top claims during your advertising and marketing.

Top #2: Being exposed in social media

This leads us into mistake number two – being exposed in social media. Often business owners are surprised when I tell them that they could be liable for things that other people have posted on their blogs, on their social media pages or on their website. There have been a number of cases over the past few years where businesses have been found liable for statements made by third-party fans that were misleading or deceptive. And in some of these cases, the company directors were also found to be personally liable. One thing to think about that, that’s a really significant point because personal liability is of course something that is extremely important for company directors and anyone involved in a business to avoid.

How do you avoid personal liability or liability of the organisation for things that are posted by third parties?

In various cases where this has been raised by the courts and where a decision has been taken that an organisation is liable for the statements made by third parties on their fan pages the website or their social media pages, these decisions have been arrived at because the organizations and the people involved on behalf of those organizations were aware that the misleading statements had been posted and they had made no effort in removing them.

In coming to this decision, the courts in each of these cases found that because the comments had not been removed then the owner of those pages had become the publisher of the testimonials or statements even though they weren’t the actual author. So if you’re in business, this decision means that it’s your responsibility to ensure that all content on your social media sites or your websites in the comments section or otherwise in other blogs that you control regarding your business is accurate whether that material is uploaded by yourself or posted by member of the public.

It’s really important to have some procedures in place to monitor your fan pages and to be proactive in the management of your websites and social media sites. And if a member of the public does post any material that is misleading or defamatory, it’s your responsibility to remove it as soon as you become aware of it.

Top #3: Copyright Infringement

The third area that we’re going to have a look at today is copyright infringement. Many business owners just don’t seem to realize that just because they find something on the internet doesn’t mean that they’re free to use it however they wish. So one of the things that you need to be aware of is that copyright protection is an automatic protection that protects the content and images of an author or someone who is the copyright owner of the materials. And even if they have posted in a public place that doesn’t remove the copyright rights of the owner of that material.

It’s really important that you be very careful when you’re putting together content to ensure that you’re not breaching someone else’s intellectual property rights in relation to that content. And it’s also important that if you are hiring others to create content for you that they are aware of the copyright and intellectual property rights issues that may exist in relation to the work that they are doing for you. It’s also important that you have a strong contract in place where anything that they create for you is assigned to you because that’s another big issue I often find.

Organisations don’t realise that if you are dealing with a contractor and they create material for you, you don’t necessarily own the underlying copyright to what they are creating for you. You may be deemed to only have a license to the use of that material not the underlying copyright ownership of that material. And you also need to make sure that the agreements that you have with these third parties that are creating content on your behalf have appropriate indemnity clauses where you are protected if the material that they’re providing to you breaches some other third-party intellectual property rights. So it’s about being aware of these issues when you’re putting together content yourself and it’s being aware of these issues when you’re engaging someone else to prepare this content on your behalf to ensure that you get protection contractually for the material that they’re providing to you.

Top #4: Spam Laws

The fourth area that I wanted to talk about today are spam laws. Spam is a really important area to really be on top of as a business owner if you’re engaged in any way in setting up marketing messages via email or via SMS.

I often like to talk about the case of GraysOnline who was fined a hundred sixty thousand dollars a few years ago for breaching the Spam Act. The reason why I find this case quite interesting is number one I think it’s a fair amount of money a hundred sixty thousand dollars is something that none of us would like to be coughing up in relation to a fine. But it’s also interesting because of what triggered that fine.

The trigger of that fine was an email campaign by GraysOnline in relation to a new website that it was about to launch. The court found that information relating to the new website was promotional in nature and because it was promotional in nature the message was required to go out with an unsubscribe function. Because it didn’t have that unsubscribe function in the email that went out, it was found that this email marketing was in breach of the Spam Act and that then triggered that really big fine.

Well what does this have to do with me as a small business owner, you might be asking and I’m glad you did. Let’s talk then about the examples of some small business owners. One that I think is a great example is a Melbourne nightclub by the name of Brown Alley who was fined fifteen a half thousand dollars for sending out marketing SMS without an opt-out function. So there you go, it’s not just big businesses, it’s also small businesses that might be in the firing line for failing to comply with the spam legislation.

What do you have to do to comply with the spam legislation and ensure that you’re not on the receiving end of a large fine? There’s three things to bear in mind to ensure that you’re marketing emails or SMS don’t constitute spam.

One is consent. You need to have the direct or implied consent in relation to your use of the marketing material that you’re sending out, the sending of your marketing material to the people that you’re sending it to. Now often newsletter email marketing software that we use has in-built functionality to help us achieve this. And so it’s great idea to use this type of software rather than sending things out directly from your email.

The second item required to ensure that marketing emails don’t constitute spam is identification. You clearly need to identify who you are in sending out this marketing material.

And number three as was shown by the last two cases that I talked about is you need to have an unsubscribe option. So that people can unsubscribe from your database and you need to ensure that you have practices in place so that if people unsubscribe you stop sending messages to them. So that’s really important.

Once again these three things are consent, identification and an unsubscribe option.

Top #5: Protecting Your Brand

And then that leads us to the fifth and the last item that I wanted to talk about today in relation to the things that you should be thinking about during marketing. And the last area and I think perhaps most important of all of the areas that I’ve spoken about today is protecting the brand that you are building.

Marketing is all about building a brand. But if you’re building a brand that you haven’t protected the risk is that your marketing spend becomes valueless at the end of the day. If you can’t protect that brand or stop other people from using a similar brand or if you’re forced to stop using your brand because someone else has a better right to it than you. So the way that you can protect your brand in Australia and in most jurisdictions overseas is through the area of trademark registration.

Trademark registration can be a simple and easy process if it is done at the right point in the lifecycle of your use of that mark and trademark registrations are one of those things that are first in best served. So it’s really important to get in early. Timing is critical with trademark registrations. It’s also critical to get trademark registration or protection for your brand to have a brand that is capable of registration and protection. And that means a brand that is not too descriptive or too generic. Something that is capable of distinguishing you from other businesses providing similar goods or services.

Trademark registrations are one of those things that sometimes seem a little bit easier on the surface than they can be in real life. There’s a number of decisions in getting a trademark registration that you need to ensure you have dealt with correctly.

You need to ensure you’re choosing the right classes of protection and that you’re registering it in the right entity that you’re making the right choice between whether or not you choose a logo or a word mark that you’re protecting and making sure that you have the specification right. But if you get the right advice and you get the right trademark in place then this protection can make all the difference for you into the future in terms of protecting that fabulous brand that you’re building with all of this marketing that you were doing in the background.

Tips on Legal Traps in Marketing 101

So that’s it that’s our top five things to be mindful of when marketing your business. As a quick recap and that action steps that you should be taking away from the things you’ve heard in this legal traps 101:

  1. Look at your marketing, review the marketing, ensure it doesn’t contain elements that might be misleading or deceptive. Make sure your organizations that are creating information on your behalf and content on your behalf also understand these risks and are looking out for these issues when they’re creating content for you.
  2. Monitor your social media pages and your blog pages and your websites wherever third parties might post content that you might be seen to be responsible for. Take down things that might be defamatory offensive or possibly misleading and just ensure that you have someone that is monitoring these pages regularly.
  3. Be careful of copyright infringement. Be careful when you’re putting together content and be careful if you’re having others put together content on your behalf to ensure that you’re not infringing someone else’s copyright or other intellectual property rights.
  4. When sending marketing materials over email or SMS, make sure you have consent, identify yourself and include unsubscribe options.
  5. Protect that fabulous brand that you are building.

Wonderful. So that’s it for the top five things to be mindful of when marketing your business or product.

If you’d like more information about this topic. Head over to our website at talkinglaw.com.au. Through that website, you’ll be able to download a transcript of this podcast episode if you’d like to read it in more detail. You’ll also there find details of how to contact our lawyers at Aspect Legal if you’d like help with any of the items we covered today. And finally, if you enjoyed what you heard please pop over to iTunes and leave us a review. Thanks again for listening in. This has been Joanna Oakey and Talking Law. See you next time.