The Australian Consumer Law and the Guidelines
Under the Australian Consumer Law (ACL), a corporation:
- must not engage misleading or deceptive conduct; or
- must not make false or misleading representations about price, standard, quality, value or style (and others) in respect of the supply, possible supply, or the promotion by any means of the supply, of goods or services.
The Guidelines have three guiding principles to assist operators of comparison websites (in order to avoid breaching the ACL):
- the facilitation of honest, like-for-like comparisons (Honesty Principle);
- transparency about commercial relationships (Transparency Principle); and
- clear disclosure of who and what is being compared (Disclosure Principle).
Honesty Principle
The ACCC regards it as essential that comparison websites allow users to make like-for-like comparisons of products and services. The Guidelines encourage operators to pursue this objective by:
- presenting results with the best match at the top (this does not always mean best price);
- disclosing what is meant by any ranking attributed to a particular product or service;
- making accurate claims about savings;
- having systems in place to ensure the accuracy and quality of product information; and
- disclosing any assumptions used when displaying search results.
Transparency Principle
Comparison websites generally always use algorithms (of varying complexity) in order to generate search results. The ACCC’s view is that these algorithms should not generate misleading results. Consistent with this view, the Guidelines suggest that operators should not manipulate algorithms to achieve misleading outcomes.
The ACCC is of the view that comparison website operators who allow commercial relationships with suppliers to impact upon the presentation or ranking of results are likely to be engaging in misleading and deceptive conduct.
In order to avoid breaking the law (the ACL) the Guidelines recommend that operators:
- prominently differentiate sponsored or advertised products from organic search results;
- not allow suppliers to pay a fee or provide some benefit in exchange for preference being given to that supplier’s products in the search results; and
- disclose their commercial relationships with suppliers even where the relationship does not affect the search results.
Key point – the disclosure of a commercial relationship with a supplier will generally be sufficient to avoid breaching the ACL where sponsored or advertised products are differentiated from organic search results. Looking at this another way, if a comparison website operator discloses the existence of the commercial relationship but does not differentiate results into advertised and organic results then the website operator will most likely be breaking the law.
Disclosure Principle
The Guidelines state that “failure to make accurate or adequate disclosure about the nature or extent of the comparison service, including market coverage, may involve misleading or deceptive conduct, including by omission, and the making of false or misleading representations.”
Many comparison website operators only compare products sold by their commercial affiliates. As such, operators should be mindful of clearly disclosing the identity of those suppliers whose products are being compared and any limiting factors for the comparison service.
Method of disclosure
The Guidelines make clear that disclosure is paramount. However, the Guidelines also accept (consistently with modern convention) that over-disclosure can actually be counterproductive for consumers. Accordingly, the ACCC suggests that an appropriate balance can be achieved by including short sentences which highlight relevant matters, in conjunction with a link or pop-up box which, at the user’s election, allows the user to access more detailed information.
If you would like your website and your website terms and conditions reviewed to ensure they do not breach the ACL please don’t hesitate to get in touch with us.
