Australia: realestate.com.au v Domain: misleading statements that brought the house down

In brief: A recent dispute between two well-known media players illustrates the need for businesses to carefully word advertisements and accurately document achievements or they could be considered misleading or deceptive.

What you need to know:

  • Be careful to be accurate in all forms of advertising.
  • When stating you have "the most" or are the "highest rated" you need to be able to provide evidence on how you have come to this conclusion.
  • If you use an asterisk to qualify your advertisement, make sure that both it and the content next to the asterisk are easy to see and read.

Background

In the recent case, REA Group Limited ("REA") v Fairfax Media Limited ("Domain")[2017] FCA 91, Domain was found to be in breach of the Australian Consumer Law (ACL) for making misleading and deceptive representations (or representations likely to mislead and deceive) in two of a number of advertisements run in February 2016.

The advertisements in question promoted the Domain app as being the best, most highly rated app, with the most listings, in contrast to competitor apps such as REA's realestate.com.au app. The decision turned largely on an analysis of:

  • how a largely uninformed cross section of the public would respond to the advertising; and
  • whether the claims could be dismissed as "puffery", which is common within the advertising industry.

The Court held that the advertisements had to be considered through the eyes of:

  • members of the public with an interest in the property market in NSW, Victoria and Queensland; and
  • real estate agents who lease or sell property in NSW, Victoria, and Queensland.

The advertisements in question

The main advertisements which were objected to by REA were as follows:

  1. That the Domain app is the "#1 property app in Australia" and "the most property listings in Sydney are on Domain".

The Court held that the evidence showed that the Domain website did not have more property listings overall in Sydney compared to the REA app and website, at the relevant time.

As such, the Court found that this was likely to mislead and deceive the public.

The Court said this conveyed the belief that "the Domain app and website has more property listings in Sydney than any other comparable app or website". Despite the presence of a footnote qualifying the statement, both the footnote itself, and the claret symbol indicating there was a footnote, were too small for those in the class to engage with.

The Court found that this was more than mere "puffery" because it had a specific and quantifiable claim to have the most listings in Sydney.

  1. That the Domain app is the "#1 property app in Australia" because it had "the best property listings in Melbourne".

The Court held that this advertisement would just be viewed as "puffery" and was not likely to mislead consumers. Claims to be "No.1" or "the greatest" are commonly made in the real estate trade. There are so many subjective factors as to what makes a property app #1 that it does not carry a definite meaning.

  1. Domain has "The most property listings in Sydney – Sydney's best property app just gets better"

The Court held that the evidence showed that the Domain website did not have more property listings overall in Sydney compared to the REA app and website, at the relevant time.

As such, the Court found that this was likely to mislead and deceive for the same reasons as number 1 above.

  1. "Should you sell? Download Australia's highest-rated property app" (Domain) (4th) & (5th)

This advertisement contained a larger more noticeable asterisk and said:

"Rated by over 21,000 consumers, All Versions rating via Google Play Store and App Store, as at 18 February 2016. 9,816 consumers have rated the Domain Property App the highest rating possible of 5 stars, 5,825 Google Play Store consumers and 3,991 App Store consumers, as at 18 February 2016."

This representation was found to be true and, as such, not misleading.

  1. "Find your next home with Australia's highest rated property app" and Download Australia's best property app" on Facebook.

In conjunction with this and point 4 above, REA argued that they conveyed the representation that the Domain app (the most recently available version) was rated more highly than any other Australian property app by an independent, objective reliable source. The Court rejected this stating that the reasonable reader would not limit it to the most recent version of the app, and that it didn't convey that it was rated by an independent expert.

While REA's current app version had an equal or higher rating than that of the current version of Domain's app, the Domain app's overall ratings on both the App Store and Google Play where higher than that of REA's app.

Conclusion

This case clearly illustrates the importance of carefully wording your advertisements and industry 'claims'. Failing to do so can lead to costly legal and reputational expenses, even when you are successful in defending your advertisements.

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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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