The use of headline advertising is a key tool in grabbing customers' attention, however its use is not always without controversy. Often such advertisements come with qualifiers or fine print which makes the deal far less appealing than it initially appears. In many circumstances consumers rightly question whether these advertisements are misleading or deceptive. In a recent dispute between two of New Zealand's biggest carpet manufacturers the Court of Appeal addressed this very issue.

In Godfrey Hirst v Cavalier Bremworth [2014] NZCA 418 Godfrey Hirst accused one of its competitors in the carpet industry Cavalier Bremworth of engaging in advertising which was misleading and deceptive and breaching ss 9 and 13(i) of the Fair Trading Act 1986. The advertising in question related to a new line of carpets which was advertised in a range of mediums with warranties such as "Lifetime stain and soil resistance" and "25 year fade resistance." Attached to these headlines were a number of complicated and strict qualifiers which limited the effectiveness of the warranties. The High Court found the qualifiers attached to many of the headline advertisements were misleading and deceptive. Nonetheless Godfrey Hirst still appealed the decision on the basis that the bar was set too high as to what should be expected of consumers targeted by headline advertising.

The first point considered by the Court of Appeal in determining the appeal was to consider who fell within the meaning of a "consumer." The Court held consumers were actual consumers in the targeted class except for outliers. Outliers were considered to encompass consumers who "are unusually stupid or ill equipped, or those whose reactions are extreme or fanciful." The Court noted that where representations are made to the public at large all the public except outliers are to be considered.

Having established those who could be considered consumers the Court looked at the standard of care expected of a consumer. It was held that a consumer must "exercise a degree of care which is reasonable having regard to all the circumstances including the characteristics (i.e. level of knowledge, acumen, ability and the like) of the target group of customers."

The Court of Appeal then looked to consider whether the standard had been set too high for consumers. The guiding principles considered by the Court in the context of headline representations with qualifying information were:


What is the overall impression or dominant message of the advertisement as a whole?


Analyse the total effect rather than the separate effect of each representation.


Was the qualifying information sufficiently prominent? (proximate, prominent and sufficiently instructive)


Glaring disparity. Where there is a great disparity between the headline representation and qualifying information the consumer must be made aware of the true position in the clearest possible way.


Tendency to lure customers into error. Does the advertisement viewed as a whole entice customers into the "marketing web" (i.e. attracting customers into a shop selling the product of the advertiser)?

The Court of Appeal held that the dominant message of the advertisement conveyed to consumers was a range of carpets with "superb warranties" which was considered misleading and deceptive because of the qualifiers attached. For example, the lifetime stain resistance warranty excluded "Pet or Human stains" and other stains including blood, crayon, hand lotion and lipstick. The Court also held that the qualifying information was not sufficiently prominent. It held that qualification of warranties as "limited" failed to sufficiently draw to consumers' attention the qualifications, and the website hyperlink to the warranties booklet failed to prevent the misleading dominant message. It was held that even if consumers could be expected to click on the link and review the warranties booklet it was far too detailed and complex to be easily understood by consumers. As the dominant message was considered misleading and the qualifying information failed to address that point, the Court held the advertisement had a tendency to tempt customers into the "marketing web."

The important implications of this decision are that it has shown that where an advertiser attaches qualifying information to headline advertising the information needs to be easily understood, sufficiently prominent and able to correct the dominant message to reflect the true meaning of the advertisement. Failure to do so leaves advertisers in a position where they are likely to mislead or deceive customers and face potential liability.

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.