This is the third, and final, part of a blog series about
the ways to keep your marketing material from being misleading or
deceptive. Read the first and
second blog here.
An advertisement stating or implying that a particular benefit
or positive outcome is likely, should also include a statement
about the risks associated with obtaining that benefit, or the
product generally. This may include a discussion of the assumptions
made in predicting that benefit.
For example, if a financial product is linked to the markets and
advertised as having an expected rate of return, it should also be
explained that this expected return may not arise, and that the
client's balance may even fall.
In the 2012 case of ASIC v Camelot Derivatives Pty Ltd , the Federal Court
considered Camelot's promotion of an options trading strategy
known as the 'Iron Condor'. Camelot was an options trading
house that advised and dealt on behalf of its clients in
derivatives and other financial products, particularly options. Its
managing director made statements to the effect that clients had
and could expect to earn significant returns from this strategy,
which Camelot had substantial experience in implementing
Unfortunately, the GFC intervened and between 2008 and 2010 many
clients incurred significant losses. The Court found that
Camelot's clients were induced to use the Camelot strategy by
the representations that they could make significant profits
through options trading. Camelot's conduct was misleading and
deceptive because it did not adequately explain the risks involved,
and did not make the potential for Camelot to make significant
profits from brokerage on these transactions – while its
clients made significant losses in the market – sufficiently
Remember to acknowledge the risks as well as the benefits when
marketing your products or services.
In addition to misleading or deceptive conduct, you should also
consider copyright and defamation.
Copyright and intellectual property
Under the Copyright Act 1968 (Cth), the creator of any
artistic or literary work has economic and moral rights that enable
that person to control how their work is used and copied, including
use in derivative works that are based on it. Coverage is automatic
as soon as the work is reduced to a material form. Similar rights
protect the owners of trademarks, brands, music, images and
characters (from Donald Duck to Harry Potter to Dirty Harry).
Music or a known fictional, or other character can be a powerful
marketing tool. Similarly, you may find a book or a website that
expresses perfectly the words that you want to say, or that adds
useful depth to your offering (as in the case of market research
for particular financial assets). If you use the intellectual
property of another person without their permission you risk a
claim for damages from the owner.
Using other people's work without their permission, or
giving them credit (attribution), is often a tempting shortcut but
ultimately it poses a risk to your reputation, and if you have to
settle a claim for damages from an intellectual property owner, you
may have to pay to the owner the profits you have made from using
When you are using the words, trademarks or other work of
others, check carefully before you use them as to whether you
should get permission from the owner. Always cite your sources.
Under the common law, and now the uniform legislation in all
States, if something you say or publish harms the reputation of
someone else, then that person has a right to recover damages from
you. Companies can't generally sue for defamation, unless they
employ less than 10 people, but individuals associated with the
company who are named in the publication can.
Before you "go negative" against a competitor,
consider whether anything you plan to say reflects on their
character in a way that makes it likely people may think less of
them as a result.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Businesses should ensure that any promotions do not cross a 'fine line' between acceptable and misleading or deceptive.
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