When you advertise a product you will now have to think twice before making bold marketing statements following a recent Court of Appeal decision.

The decision, described as a win for consumers, involved a dispute between carpet manufacturers. Godfrey Hirst claimed that Cavalier Bremworth’s marketing “superb lifetime” carpet warranties breached the Fair Trading Act because those warranties were significantly limited by fine print.

Under the Fair Trading Act, it is unlawful to mislead consumers, give false information or use unfair trading practices.

Because of the importance of the decision to consumers, the Commerce Commission sought the Court’s guidance about when a marketing claim breaches the Act.

A Commerce Commission media release concerning the decision quotes the Commission’s General Counsel, Competition, Mary-Anne Borrowdale, saying; “We have become increasingly concerned about the prevalence of misleading headline claims in advertising, especially online, where bold headline statements are made but they are then undermined by terms in the fine print. We want businesses and consumers to have a clear sense of what the ground rules are.”

The Court of Appeal decision makes a number of rulings all advertisers should bear in mind when advertising to consumers.

The ruling first addressed who is the consumer. Previous Court decisions have assessed the inferences consumers draw from advertising through the eyes of “the average New Zealand shopper”. Meaning would an average person be misled or deceived. The Court of Appeal clarified that advertising is now assessed through the eyes of all consumers the advertising targets except “outliers” who are described unsympathetically as “consumers who are unusually stupid or ill equipped, or those whose reactions are extreme or fanciful.” This means that even if advertising does not mislead the average shopper, it might still breach the Act if it misleads the less than average shopper.

The ruling then turned to how that shopper might be misled by a bold marketing statement which was qualified in fine print. The key consideration is the “general thrust” of the advertisement, being the dominant message the shopper takes from it. It does not matter if the shopper later comes to appreciate the true position before purchasing the product if they have been drawn into doing so by a misleading general thrust.

Where there is qualifying information the trader must ensure it is sufficiently drawn to the attention of targeted consumers. The Court of Appeal suggests consideration of the proximity and prominence of the qualifying information. Also important is whether the information is sufficiently instructive to remove the risk that the advertising claim might mislead or deceive. Where there is a glaring disparity between the advertising claim and the qualifying fine print the advertiser is under a weighty burden to draw the consumer’s attention to the true position in the clearest possible way. The effect on advertisers is there is now considerable risk in simply putting an asterisk after an advertising claim referring to fine print not readily accessible and sufficiently plainly written.

The Courts have dealt with numerous bold advertising claims from “Wonder White” bread containing “now twice the fibre”, to Panasonic asserting its Evolta battery was the “Guinness World Record Holder For The Longest Lasting AA Alkaline Battery”. But it is now even harder for advertisers to win.

This post was published in the FMCG Business magazine