Consumer Law: What is bait advertising? And why is it prohibited?

by The Findlaw Team

It’s probably a gross understatement to suggest that we’re at that time of the year where many people are maxing out their credit cards and splurging on presents for loved ones. Some of the more diligent readers will probably have started their Christmas shopping already, whilst for others, the ‘adventure’ is about to begin. 

As the festive season is about to kick into gear, businesses will also be advertising their wares in line with the season, luring consumers in with the promise of a special deal, for that special someone. For the most part, the advertising will accurately reflect the product and price, however, there may be instances where an advertiser will put forward a product or service designed to get a customer into the store, but then attempt to lure the unsuspecting consumer to purchase another product which may be higher in price: this practice is known as bait advertising and is prohibited under the Fair Trading Act 1986 (FTA).

 Bait advertising and the FTA

Firstly, s 19(1) of the FTA prohibits a person who is involved in trade from advertising goods or services for supply at a specified price if they:

  • do not intend to offer the goods or services for supply, or
  • do not have reasonable grounds to believe they can supply the goods or services,

at that price for a reasonable period and in reasonable quantities, having regard to:

  • the nature of the market in which the person carries on business, and
  • the nature of the advertisement.

The provisions also require that a person who advertises goods or services for supply at a specified price, must offer the goods or services at that price for a reasonable period and in reasonable quantities, having regard to the nature of the market where they carry on business and the nature of the advertisement (s 19(2)).

How will a person be found to be in contravention of the bait advertising provisions?

For a person to be found liable for contravening s 19(1), it needs to be proved that during the period of the advertisement, the person either

  • did not have an intention to offer for supply the goods or services at the specified price for a reasonable period and in reasonable quantities, or
  • did not have reasonable grounds for believing that goods and services could be supplied by them at the advertised price for a reasonable period and in reasonable quantities.

Whereas s 19(2) has no requirement to show what the person’s intention was. It only requires proof of the advertisement for supply of goods or services, at a specified price, and proof the goods or services where not supplied at that price for a reasonable period or in reasonable quantities.

One of the elements of s 19 is that of reasonableness. Whether a period of sale or the quantities available are reasonable will depend on the nature of the market and the advertisement. The size of the seller’s business and the number of regular customers may be examined to determine what is reasonable. The type and reach of the advertisement and its relation to quantities of goods or services being advertised can also be examined to determine what was reasonable in a particular case.

What are the punishments for a person found to be engaging in bait advertising?

A person who contravenes, s 19 of the FTA commits an offence, and upon conviction will be liable for a fine of up to:

  • $60,000 (for a person who is not a body corporate),
  • and $200,000 (for a body corporate).

The courts can also issue: injunctions, disclosure orders, publication orders, orders that a contract is void or varied, orders to refund money or return property, orders for payment for loss or damage, orders to repair goods or supply parts for supplied goods, and orders to supply specified services.

A purpose of the FTA is to prohibit certain conduct and practices in trade, with the aim of protecting consumers. If you are experiencing any issues and need assistance, please seek the help of a lawyer who will be able to advise you on the appropriate course of action regarding your matter.

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