As the generation who ‘grew up with the internet’ moves into more senior roles in professional service environments, a new trend in misleading and deceptive advertising is emerging and it is getting harder to spot and even harder to police – because it has very quickly become ubiquitous.

A click on the ACCC website tells this generation that:

• Businesses should be honest in their dealings. Businesses shouldn’t try to gain an unfair advantage by making misleading claims about their products or services.
• Any information or claim that a business provides about its products or services must be accurate, truthful and based on reasonable grounds.

• This rule applies to any communication by a business, including through (relevantly) advertising, whether verbally or in writing, social media, testimonials and websites or any other platform.

Most consumers have heard of misleading and deceptive conduct as a concept in the context of goods (products), but it is poorly understood and rarely unpacked in the context of advertising for a service.  The Competition and Consumer Act 2010 (Cth), Schedule 2, Section 18 (Australian Consumer Law (ACL)) says that a business must not make a false claims or misleading representations about goods or services, and this means a business is not allowed to make a statement that is incorrect or likely to create a false impression.  It does not matter if the business did not intend to mislead or deceive, what matters is how their statements and actions affect the consumer. A loss does not need to be suffered by a consumer for a penalty to be applied.

The tools of the self-promoting service provider are not new – they include comparative advertising, ‘vanity awards’, testimonials and reviews, paid advertorials and misleading or false claims.  What has changed are the delivery channels.

In old media terms, ‘paid advertising’ (or paid advertorial) was a standard way to promote a services business.  Consumers were generally ‘educated’ insofar as they knew the provider of the service had paid a fee to have their service promoted in, for example, a newspaper or magazine, on television or radio or through sponsorship. Advertising tended to focus on ‘testimonials’ and ‘comparisons’ between service providers and the law responded well when regulating false or misleading statements that could arise with this type of services promotion.

New media and advertising channels, specifically social media, and other private online publications (such as industry, professional or business group-based publications), are now used to disseminate paid self-promotion.  It is sometimes very hard for consumers to know that the provider of the service has paid significant sums of money to capture consumer attention.  It can also be very hard to regulate because of the nature and sheer volume of social media content and publications, the opaque characteristics of the algorithms that promote service provider content, and the difficulty that lawmakers have in keeping pace with regulating new media and advertising channels, including social media platforms, as they have emerged and continue to develop.

An industry competitor is very likely to notice the bogus claim or a false testimonial from a fake customer because those operating in the industry are aware of the truth or the context in which the claim is made.  However, a consumer is typically an industry outsider and, given the volume of this self-promotion washing through in a typical day, unlikely to focus on the promotion until they need the service.  And that is when the harm crystallizes.

A remedy for the impacted consumer does exist.  A complaint to the ACCC is often the best way to draw misleading self-promotion to the attention of the regulator.  However, if a consumer suffers loss because of misleading advertising, for most, the cost to prosecute a claim is material and the ACCC is generally under-resourced to act immediately.  The typical self-promoter knows this and is happy to take the risk.  Further, there is often no apparent loss suffered by the consumer and consumers often lack a point of reference to know if they received a more expensive or poor-quality level of service.

Direct complaints to the self-promoter are typically met with “it’s just puffery” or “I’ll take it down”, and there is usually no recognition (admission) of the breach of law.  The ACCC does say (Advertising and Selling Guide – A guide for Business, July 2021 at page 10) that statements are not considered misleading or deceptive under the ACL if they are ‘puffery’.  ‘Puffery’ is a claim that is wildly exaggerated, fanciful or vague made about a service that no one could possibly treat seriously or find misleading.

However, the Commission sets a high bar for ‘puffery’, and it’s a bar that few self-promoters can meet.  This is because a promotion or ‘tag line’ is “best accountant” or “top 10 in Australia” and far from obvious exaggeration like “the best burgers in the world”).  A claim that promotes a quality or skill that is supported by poorly qualified ‘evidence’ or a bogus fact or testimonial, that an unsuspecting consumer cannot quickly or easily verify, is not ‘puffery’.

Vanity awards are fake awards which should not be taken at face value. For consumers that are willing to dig a little deeper, or to industry insiders, it is easy to find that nearly any enterprise can be awarded as the ‘top of their field’ if they are willing to pay a simple fee.

Business ‘vanity awards’ are often set up as schemes where award recipients can nominate themselves and either pay the award organiser a fee, take a table at the very expensive awards ceremony, commit to providing editorial or unpaid content for the organiser’s publication, or commit to use (or show a track record of using) the organiser’s products or services, as a quid pro quo for ‘winning’ the award.  They are run by publishers, event management and marketing organisations or by companies that operate large data collection enterprises.

These awards typically have long lists of ‘finalists’, which in some cases include every business that self-nominated for the award.  They are known as participation awards to industry insiders but can convey a very different message of credibility to a common consumer.

Generally, there is nothing wrong with these awards.  The legal issues tend to arise when a nominee or ‘winner’ leverages their nomination or award ‘win’ and fails to appropriately contextualise the nature of the accolade.  Advertisers leveraging an award need to remember:

• The harm caused by the vanity award springs from the overall impression that promotion of being an award finalist or winner creates in the eyes of the ordinary consumer of the relevant services.
• An award can give the impression that the business comes highly regarded and is a reasonable choice as a logical person would believe it had been independently judged against its competitors in a market.
• Promotion of a nomination or victory in an awards program can be misleading if the business does not explain the category or class of persons who participated in the award category and the basis on which the award was determined.
• Without qualification, these awards give consumers false confidence in the quality of a service on the basis that another entity is satisfied with or has praised the service as being the best in their industry.

Comparative advertisement is a technique designed to highlight the competitive edge one supplier of a service has over another service provider.   Most consumers are familiar with comparative advertising that directly challenges a competitor’s product (on the basis of quality, price, range or quantity).  With respect to service industries, comparative advertising tends to target skill, technology, experience, qualifications or expertise, and service delivery.

There were several legal cases involving comparisons between goods in the 2000s including for telecommunications products (Telstra v Optus); beer (Tooheys v CUB); batteries (Duracell and Eveready) and headache tablets (Panadol and Nurofen).  These cases all looked at advertising in the more traditional sense (largely old media delivery, via television or print advertisements).

The cases established that businesses cannot exaggerate or use ‘half-truths’ when making comparisons.  Promotional material must use accurate information to describe the competing product or service and it cannot compare with a non-existent competitor or class of competing suppliers.  All comparisons must be made on an ‘apples for apples’ basis, unless qualified by accurate information to clarify any differences.  And the cases all make it clear that it is the overall impression that the reasonable consumer will assess.

The law set down by these product cases applies equally to comparative advertisements for services.

Comparative advertising and marketing effort centered on being a finalist for a ‘vanity award’ to create credibility is increasingly underpinning misleading and deceptive advertising for professional services.

Vanity awards have been used in markets for more commonly accessed services (industries like real estate, recruitment and financial services) for some time.  Now they are used in promoting foundational professions – engineering, law, accounting and medicine – to gain the appearance of a legitimate accolade and heightened level of apparent expertise.

There can be clues that an award might be a vanity award:

• If the award is called the ‘Australian’ award but is not backed by a national professional association.
• If the category says it is the ‘Top 200’, but the market is not defined.
• If the designation is ‘Best’, but the field is narrowly drawn or limited to paying nominees.

Any marketing designed to demonstrate expert accreditation, or a level of professional ranking, should inform consumers if the business has nominated itself for the award, paid (directly or indirectly) to participate in the award or award ceremony and define the class or group of finalists in the award category.

For example, a statement that “It is an honor to be considered in the top 10 in Australia” is completely misleading and could not possibly be seen as ‘puffery’ where:

• the award program is run by a magazine (not an industry association);
• the award nominees are not competing with a reasonable sample of other recognised professionals in the class of persons who practice the art or skill; and
• none of that information is ever made clear to the consumer.

Further, it is misleading if an award nominee does not disclose that the nomination was made via a self-completed form, or by the nominee’s business or marketing consultant, that the nominee’s business paid to participate or contributes to the promoter of the awards (through advertising, providing content or purchasing a table at an event).

It is also illegal to provide and promote a testimonial that is ‘fake’.  There is a very fine line between marketing that promotes winning or being a finalist for a ‘vanity award’ and a fake testimonial.  For example, a testimonial is not true if a colleague likes, reposts or promotes a report of a nomination on social media and claims the nomination “is proof” that a service provider is amongst the best in a national class.  This type of structured cross promotion is false advertising.

More needs to be done by the ACCC to educate consumers about the tools used by self-promoters to win work and compete in markets for professional services.  The issues, which have existed for some time for products and in high volume and everyday service sectors, are now prevalent in the professional services market.  The tools used by the typical self-promoter are easy for competitors to spot but are nearly always missed by consumers and it is very hard to assess the damage they cause.

Where a business has paid for an award package so they can gain the appearance of a legitimate accolade, care needs to be taken to ensure consumers are appropriately informed regarding the truth of the award.  Paid participation must be disclosed.  Similarly, comparative advertising must be undertaken on an accurate ‘like for like’ basis, defining the basis for a class of service (or service provider) being compared.  This is because the award or comparison between service providers can give the impression that the business is highly regarded, and a reasonable person would believe it had been independently judged against competitors using credible criteria.