The Australian Competition and Consumer Commission has fined Nissan $19,800 after the car giant was accused of misleading consumers with a car ad that showed a vehicle that sold for more than the advertised price.
The ACCC took issue with Nissan Dualis “Paintball” advertisement which showed both a red ST manual hatch Dualis and a silver Ti AWD Dualis.
The silver Dualis was a superior grade vehicle that included optional extras such as metallic paint, panoramic sunroof and leather seats and trim but the drive-away price displayed in the advertisement only applied to the red Dualis.
ACCC chairman Rod Sims said in a statement announcing the fine that businesses need to ensure consumers are not misled about the price of advertised goods.
“An advertisement which features a vehicle with optional extras, such as metallic paint or a sunroof, but only promotes the drive-away price for a base model is prone to mislead consumers,” he said.
“We have received a number of complaints about this type of advertising, and we need to ensure advertising standards are maintained.”
Sims said the outcome was a warning to the motor vehicle industry as a whole and Nissan has acknowledged that the advertisement was likely to have contravened the Australian Consumer Law.
A spokesperson for Nissan told SmartCompany it had worked very closely with the ACCC in agreeing to the undertakings and said the car company takes its advertising obligations very seriously.
“We will fully comply with the undertakings we have given to the ACCC to ensure that the way that we advertise our great products continues to be clear and accurate,” the spokesperson said.
Sally Scott, partner at law firm Hall & Willcox, told SmartCompany the approach used by Nissan is quite common not only in car advertising but also in advertising relating to other products such as new homes.
“There is a clear commercial incentive for businesses to show the best versions of their products but also show low prices,” Scott says.
“When businesses prepare their advertisements, they need to focus not only on whether the advertisement is likely to sell products or attract consumers, but also whether the advertisement could be misleading.”
If a business is caught for misleading advertising Scott warns the fine could be much greater than the $19,800 imposed on Nissan and could be up to $1.1 million along with damaging public relations.
“Although this fine was quite lenient, Nissan would no doubt face a more significant fine if it displayed ongoing indifference or recklessness towards misleading advertising,” she says.
“It would be very dangerous for businesses to look at this situation and decide to take a risk with their advertising because the fine is likely to be low.”
Scott says if the ACCC forms a view that a business has a practice of taking commercial risks to run with advertising that could be misleading, the fines escalate very quickly.
This is what happened with TPG which was fined $1.25 million for misleading advertising in circumstances where it was taking ‘calculated risks’.
“Pricing and product pictures must match otherwise it needs to be made very clear in the advertisement that the price in the advertisement is not for the product shown,” Scott says.
“Businesses should not assume small print will save them in this situation.”
She also warns that businesses should not approach advertising with the idea that “everyone else is doing it and I need to compete”.
“It can be a fine line as to when an advertisement is misleading,” Scott says.
She recommends businesses take into account the wide range of consumers who may form many different interpretations of an advertisement.
“If a business feels as though it’s trying to get away with something, it has probably gone over the line into being misleading.”