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INFORMATION & COMMUNICATIONS TECHNOLOGY LAW, 2017
VOL. 26, NO. 2, 73-89 Routledge
https://doi.org/10.1080/13600834.2017.1289835 Taylor & Francis Group

Online shopping, misleading advertising and consumer

protection
Kanchana Kariyawasama and Shaun Wigleyb
aBusiness Law, Business School, Griffith University, Nathan, Australia; bGriffith Law School, Griffith University,
Nathan, Australia

ABSTRACT KEYWORDS
One of the most substantive developments in the delivery of Online advertising; Consumer
marketing activities in recent years has undoubtedly been the Protection; Misleading;
emergence and growth of Internet shopping. This relatively new Deceptive Advertising
form of communication has revolutionised the buying and selling
of products and services, enabling customers to select and import
items - many of which are not available through local shop fronts
- directly from vendors around the world with the click of a
button, and often at a reduced price. Although online shopping
has provided a new international landscape to conduct business,
the use of this medium and the absence of face-to-face
interactions has presented the law with numerous challenges in
terms of the scope of consumer protection. This article examines
the nature and extent of misleading and deceptive online
advertising and looks at the degree to which common law and
legislation have evolved to deal with false, deceptive or
misleading advertising on the Internet.

Introduction
Advertising has been defined as 'a work unit for introducing and selling a good or service
to mass media buyer'.' Traditionally, conventional means of communication such as radio,
television, cinema, posters, brochures and billboards have been utilised to advertise goods
and services. 2 However, since the development of the computer networks and the Inter-
net, a new form of advertising is being used to enhance the communication process
between buyers and sellers. This new tool and its developments have led to a change
in the communication process between sellers and buyers, with the result being that
the consumer has become an active part in the communication process.
Yet, advertising plays a significant role in today's economy and its presence in both
print and electronic formats is likely to continue.4 Since the advent of the Internet,

CONTACT Kanchana Kariyawasam 0 k.kariyawasam@griffith.edu.au

iYusuf Kes, 'Current Approaches in E-Advertisement' (2011) 2(2) UBSS 124, 124.
21bid 124, 124.
'lbid 124, 124.
4
See, e.g, Television Bureau of Advertising, Inc, Trends in Advertising: Estimated Annual U.S. Advertising Expenditures 1998-
1999 (showing total advertising expenditures for all media increasing 7.5% in 1998 and 6.8% in 1999), quoted in Thomas
W Edman, 'Lies, Damn Lies, and Misleading Advertising: The Role of Consumer Surveys in the Wake of Mead Johnson
v. Abbott Labs' (2001) 43 Wm. & Mary LR 417.
0 2017 Informa UK Limited, trading as Taylor & Francis Group
74 K. KARIYAWASAM AND S. WIGLEY

online advertising has grown rapidly as consumers have shifted their attention online.
People read online advertisements differently from printed ads - skim, scroll, click-
through and pop-ups and 'I agree' forward movers - so people read them more quickly
and less comprehensively. As Internet use grows, consumers are more focused than
ever on buying products and services online. However, one of the major issues arising
from online shopping is frequently misleading or deceptive advertising. There is no
doubt that the Internet increasingly inspires and dictates consumers' consumption
choices;6 unfortunately, misleading advertisements and misrepresentations of information
on the Internet have become a major challenge with online shopping.7 In fact, false and
deceptive practices are easier to carry out electronically than using traditional mediums
because it is relatively simple to make oneself appear legitimate on-line." In reality, the
phenomenal growth in advertising on the Internet and marketers' ability to rapidly
change the content of online advertisements has created concerns about consumers
being exposed to a plethora of potentially misleading advertisements on the Internet.
Since the regulation of online advertising and marketing is a relatively new it has pre-
sented the law with numerous challenges in terms of the scope of consumer protection.
This is because there are uncertainties and gaps in applying existing consumer protection
laws which were originally developed for conventional advertising mediums to online
advertising. On one hand, consumers demand a hard regulatory approach that requires
a strict legal prohibition of unethical practices. On the other hand, business owners and
providers felt that a soft approach was more appropriate, which would require self-regu-
lation through codes of practice.1 0 This article examines the lack of clarity of law in this area
and how this ambiguity negatively impacts Australian consumers.

Types of online advertising

Online advertising has enabled businesses to advertise worldwide to millions of consu-
mers at unprecedented speed." For an example, Australian digital advertising experi-
enced a significant surge in the final quarter of 2015, reaching AU$6 billion for the 12
months ending 31 December; this represents a 25.3% increase over CY 2014.12 Australians
spent a record AU$16.6 billion online in the year to January 2015, an increase of 9% year-
on-year.1 3 Internet advertising is set to account for more than 50% of the total Australian

5
Philip J Kitchen and E Uzunoglu, Integrated Communications in the Postmodern Era (Palgrave Macmillan, 2015) 100-117.
6Victor T. Nilsson, 'You're Not from Around Here, Are You? Fighting Deceptive Marketing in the Twenty-First Century' (2012)
54 ALR 801, 827.
7
Sergio Roman, 'Relational Consequences of Perceived Deception in Online Shopping: The Moderating Roles of Type of
Product, Consumer's Attitude toward the Internet and Consumer's Demographics' (2010) 95 (3) JBE 373-391.
8
Russell G. Smith, 'Deceptive and Misleading Online Advertising and Business Practices'at <http://www.aic.gov.au/media
Iibrary/conferences/other/smithjrussell/2000-1 0-crf.pdf> accessed 22 September 2016.
9
Anu Mitra, Mary Anne Raymond and Christopher D Hopkins,'Can Consumers Recognize Misleading Advertising Content in
a Media Rich Online Environment?' (2008) 25 (1) Psychol Market 655-674.
0
i Russell Smith, 'Deceptive and Misleading Conduct On-line Advertising and Business Practices' (Research Discussion Paper,
Australian Institute of Criminology, 2000) 7.
"Richard Raysman and Peter Brown, 'On-Line Advertising and Marketing', (1999) 222 NYU 53, quoted in Michael A Leon,
'Unauthorized Pop-up Advertising and the Copyright and Unfair Competition Implications' (2004) 32 (3) HLR 953, 957.
12
1AB Online Advertising Expenditure Report - Quarter ended Dec 2015 (CY2015) at <https://www.iabaustralia.com.au/
research-and-resources/advertising-expenditure/item/1 1-advertising-expenditure/2055-iab-online-advertising-
expenditure-report-quarter-ended-dec-201 5-cy201 5> accessed 26 September 2016.
13
NAB Online Retail Sales Index In-depth report - January 2015 at <http://business.nab.com.au/online-retail-sales-index-in-
depth-report-january-2015-9980/> accessed 8 October 2016.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW G 75

advertising market by 2019.14 The Internet advertising market will reach AU$8.2 billion by
2019, compared to AU$3.8 billion for free-to-air television, AU$1.5 billion for newspapers
and AU$1.3 billion for radio.1 5 In fact, Internet advertising is expected to be the fastest
growing of these sectors, increasing at a compound annual rate of 13% until 2019.16
There are various forms of online advertising, including search engine and social media
advertising, banners, pop-up ads and so on. Search-based advertising has attracted enor-
mous attention in the advertising industry because of its ability to target potential custo-
mers with quantifiable returns. 1 7 Advertising in search engines is the largest and one of
the fastest growing segments of online advertising."' The main search engines, such as
Google, Yahoo and Bing provide a platform or an intermediary that does not charge
users to conduct searches but facilitates web searches by allowing users to enter terms
into a search field. Search advertising enables advertisers to make an educated guess
about what the user is seeking and then displays advertisements that are intended to
be responsive to that search. 9
The growth of online social media platforms around the world has also revolutionised
the world of advertising by changing the way in which consumers search, select, share and
appraise information and make purchase decisions. Because social networks gather such a
large amount of user information, they are able to target their audiences in a wider variety
of ways than other online platforms. 2 0 Social media advertising can take the form of direct
display ads purchased on social media such as Facebook, Instagram, Twitter and YouTube,
which enables customers and prospects to communicate directly to their brand represen-
tative or about their brand with their friends. 21 Reviews or testimonials by consumers
about a product on social media sites is a form of social media advertising as well, as
modern consumers tend to rely on the reviews of their fellow consumers. In particular,
'online reviews are another form of consumer information that is playing an increasingly
important role in online markets and in consumer markets more generally, helping shape
consumers' product knowledge and purchasing decisions'.22
Another form of online advertising is pop-up ads, which open up an entirely new web
browser to display advertisements. Pop-up advertisements are designed to link with a
user's most frequently visited websites. When the user clicks on one of these links, the
pop-up advertisements appear automatically as a separate web page.2 3 It is believed
24
that pop-up ads command higher purchase intention than standard banner ads.

14
Australian entertainment & media industry must 'have a go' to grow at <http://www.pwc.com.au/press-room/2015/
entertainment-media-outlook-grow-junl5.html> accessed 2 August 2016.
islbid.
16
1bid.
17
Michael Cho and others, 'Search-based Online Advertising' (Working Paper, 2005).
18
Christina Spurgeon, Advertising and New Media (Routledge, New York, 2008) 25.
19
Jonathan J Darrowal and Gerald R Ferrera, 'The Search Engine Advertising Market: Lucrative Space or Trademark Liab-
ility?' (2009) 17 TIPL 223, 224.
20
Why Social Media Advertising is Set to Explode in the Next 3 Years <http://marketingland.com/social-media-advertising-
set-explode-next-3-years-121691> accessed 22 October 2016.
21
Simona Vinerean and others, 'The Effects of Social Media Marketing on Online Consumer Behavior' (2013) 8 (14) UBM 66,
66-67.
22
Australian Consumer Law Review, Issues Paper 2016 <http://consumerlaw.gov.au/files/2016/03/ACLreview issues_
paper.pdf> accessed 4 September 2016.
23
5ee Dharmendra Mehta and other,'An Empirical Study on Young Executive Response towards Popup and Banner Adver-
tisement' (2010) 5 (1) SJM 51, 52.
24
Le Wang and other, 'The Influence of Pop-up Advertising on Consumer Purchasing Behavior' International Conference on
Mechatronics, Electronic, Industrial and Control Engineering (MEIC 2014) 218.
76 G K. KARIYAWASAM AND S. WIGLEY

Visual or banner advertisements are part of the web page's tapestry; when clicked on,
they link the user directly to the advertiser's chosen website.2 5 Banner advertising is con-
sidered to be less intrusive than pop-up advertising because it is part of the visual back-
ground of the page, as opposed to pop-up and floating advertisements that appear
automatically.2 6
Advertisers are using different methods of online advertising to promote and sell
various kinds of products and services. An individual's perception of online advertisement
plays a major role in whether or not that person is motivated to partake in consumption
activities. 27 However, the competition adds performance pressure on the business oper-
ators to behave more aggressively, which means the public is faced with an increasing
number of confusing and misleading advertisements online.2 8

Online advertising and consumer protection

Australian consumer laws have undergone a striking number of changes and reforms in
the last decade. The Australian Consumer Law 2010 (the ACL) in particular, has put in
place a number of provisions to ensure that businesses within Australia engage in
ethical business practices. This is demonstrated in particular, under Chapter 2 of the
ACL where consumers' general protections are outlined. 2 9 Accordingly, it is illegal for
businesses to make statements that are incorrect or likely to create a false impression
to consumers.
The ACL however, is generally silent as to whether its provisions apply to conduct
carried out electronically.3 0 There is for example, no definition as to the scope of the
terms 'online', 'internet', 'e-commerce', 'advertisement' and 'advertising'. This infers that
the ACL is intended to apply to all advertising whether online or offline. If a definition
of 'advertising' or 'internet' was included, this could be interpreted as either not including
online advertising or a technological development in Internet technology which in turn
would be an immediate obstacle against the ACL's application to online advertising.3 'By
way of contrast, section 2 of the ACL provides that'publish, in relation to an advertisement'
includes an 'electronic form' for 'public display' and that 'sale by auction' allows for auc-
tions to occur by electronic means'. It is therefore clear that these definitions clearly indi-
cate the ACL's extension to advertisements published for public display through the
electronic means of the Internet.
Section 18(1) ACL provides that '[a] person must not, in trade or commerce, engage in
conduct that is misleading or deceptive or is likely to mislead or deceive'. This section is a
32
civil penalty provision whereby the remedies include inter alia, injunctions and damages.
It is important to note that no criminal penalties are applicable for breaches of section 18.

25
26Tchai Tavor, 'Online Advertising Development and Their Economic Effectiveness' (2011) 1 (6) AJBMR 121-123.
1bid.
27
Le Wang and others (n 24).
28
New ad law pushes consumer protection (2015).
29
Competition and Consumer Act 2010 (Cth), ch 2.
30
Russell G Smith, 'Deceptive and Misleading Online Advertising and Business Practices' <http://www.aic.gov.au/media
library/conferences/other/smithjrussell/2000-10-crf.pdf> accessed 12 August 2016.
3
'Further to this, there is no definition of to 'online', 'internet', 'e-commerce', 'advertisement' or 'advertising' under s 2B
definitions of the Acts Interpretation Act 1901 (Cth).
32SS 232 and 236 of the Australian Consumer Law 2010 (Cth).
33
See Chapter IV of the Australian Consumer Law 2010 (Cth) generally.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW 77

Misleading or deceptive conduct for the purposes of this provision extends to include
exaggerated sales talk about a product, failure to disclose all relevant information, provid-
ing incomplete information about a product, and in some circumstances silence. However,
conduct which is merely confusing will not be in breach of section 18. Section 18 applies to
the conduct of 'persons' in trade or commerce, either among Australia's states or terri-
tories, between Australia and places outside of Australia, or by way of supply of goods
or services to the conduct of persons in the same circumstances. Whether the conduct
is considered misleading or deceptive depends upon what that conduct conveyed to
the intended audience, being the plaintiff, or members of the relevant class of the
public, or others.34 It is not necessary for the court to find that it is more likely than not
that the readers were led into error, and it is sufficient for there to be a real and not
remote possibility of the reader being misled or deceived. It has been argued that the
reader/recipient's understanding of the information that the plaintiff contends was mis-
leading or deceptive, as determined by the court, is critical. 3 6 It is argued that:

In deciding whether a person has engaged in misleading or deceptive conduct in trade or

commerce, and whether there is sufficient connection between that conduct and the plain-
tiffs loss or damage such that relief should be ordered, the court manifestly does not do so
by application of any rigid formula. The wide range of economic activity in respect of
which those questions have arisen has seen the courts, based on the statutory provisions,
develop principles to fit the factual circumstances of the case. The applicability of those prin-
ciples is substantially affected by the issues raised by the facts ...

Simultaneously, whether the conduct is misleading or deceptive will also depend on the
medium in which the advertisement appeared - for example, television, radio and Internet
- including the context of the class of consumers who are likely to be affected by the
conduct.38 As the courts have emphasised on numerous occasions, under the ACL, it
does not matter whether a business did not have the intention to mislead or whether
the consumers have actually suffered any harm. 9 Instead, the focus is on whether
there is a potential to mislead. Hence, it is apparent that the ACL extends equally to
any claims made by businesses about their products or services in online mediums,
such as testimonials on websites or social media pages, in the same way it does to con-
40
ventional marketing channels.
Specifically, in order to be 'misleading', conduct must convey a 'meaning which is
inconsistent with the truth', 4 1 and thereby 'lead into error or ... cause to err'. 4 2 However,

34
Graeme S Clarke, 'Misleading or Deceptive Conduct Cases Western Australian Developments' (2014) <http://barristers.
com.au/wp-content/uploads/2014/1 1/Misleading-or-Deceptive-Conduct-Cases-Western-Australian-Developments-Paper.
pdf> accessed 12 October 2016.
3
Ibid.
36
1bid.
37
lbid.
38
Australian Consumer Law, 'Avoiding Unfair Business Practices - A Guide for Businesses & Legal Practitioners'
<consumerlaw.gov.au/files/2015/09/avoiding-unfair business-practices-guide.rtf> accessed 22 September 2016.
39
See J Carstensen, 'Scoopon' scoops up' $1 m in penalties for misleading conduct (Case: ACCC v . . Case citation: ACCC v
Scoopon Pty Ltd' (2014) <https://contractadvice.wordpress.com/2014/02/14/scoopon-scoops-up-1 m-in-penalties-for-
misleading-conduct-case-accc-v-scoopon/> accessed 28 August 2016.
40
ACCC at <http://www.accc.gov.au/accc-book/printer-friendly/29527> accessed 23 August 2016.
41
World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 201 per Brennan J.
42
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 555 per Lockhart J quoting the Oxford
English Dictionary (1987); see also Charles Chew, 'The Scope and Limitations of the Doctrine of Misleading or Deceptive
Conduct in the Context of Guarantees: Some Perspectives and Uncertainties' (2006) 3 Macquarie JBL 79-98; see also Jason
Cornwall-Jones, 'Breach of Contract and Misleading Conduct: A Storm in A Teacup?' (2000) 24 (2) MULR 249-279.
78 G K. KARIYAWASAM AND S. WIGLEY

the term 'deceptive' may have a narrower meaning in that the word appears to carry 'a
connotation of craft or overreaching'. 4 3 If so, it may be that 'deceptive' is 'redundant' 4
in section 18 of the ACL and their analogues, but the interaction between the two
words within the sections remains an unexplored area of the law. It has been held that
it is unnecessary to prove that the conduct in question is actually misled or deceived
anyone in order to establish a contravention under section 18 of the ACL.4 5 Conduct is
considered likely to mislead or deceive if there is 'a real or not remote chance or possibility
regardless of whether it is less or more than 50 per cent', 4 6 of the conduct having that
effect.4 7
Similarly, section 29 of the ACL prohibits false or misleading representations however
unlike section 18, this is limited to such conduct that occurs 'in connection with the pro-
motion by any means of the supply or use of goods or services'. 48 Section 29 on the other
hand, attracts broader and more severe penalties and is not a civil penalty provision.
Unlike with section 18, those who have contravened this provision can also been liable
for committing a criminal offence and be subject to a fine of up to $220,000 for an indi-
vidual or $1,100,000 for a corporation. In this instance however, the criminal standard of
proof of beyond reasonable doubt applies. 49 In the event that a breach cannot be estab-
lished beyond reasonable doubt, affected parties may in the alternative seek a less severe
civil 'pecuniary penalty' whereby an affected party merely needs to establish that the
breach occurred on the balance of probabilities (in other words, the civil standard of
proof).5 0 As a matter of practice, often plaintiffs will allege breaches of both sections 18
and 29 if possible, due the more broader and severe remedies applicable under section
29.51
In addition, consumer protection for misleading or deceptive conduct is provided
through Statutory Consumer Guarantees under Div 1 of Part 3-2 of the ACL. An
example is the guarantee that goods will correspond with the description under section
56 which ensures that suppliers cannot mislead consumers when describing a product.
Although the consumer guarantees apply to online sales, section 56(1)(b) of the ACL sti-
pulates that the provision does not apply with respect to auctionS. 5 2 That said, the Consu-
mer Law Centre, the Queensland Office of Fair Trading and the ACCC have opined that the
guarantee is likely to still apply to online auctions such as Ebay as the provider is not acting

43
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 per Gibbs CJ.
44
1bid 191, 198.
45
1bid 191, 198.
46
Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 198 per Gibbs CJ.
47
Charles Chew, 'The Scope and Limitations of the Doctrine of Misleading or Deceptive Conduct in the Context of Guaran-
tees: Some Perspectives And Uncertainties' (2006) 3 Macquarie JBL 79-98.
48
Australian Consumer Law 2010 (Cth) ss 224 and 225; ACCC v Energy Watch Pty Ltd [2012] FCA 425, [16].
495 151(1) of the Australian Consumer Law2010 (Cth); Fines & penalties Australian Competition and Consumer Commission
<https://www.accc.gov.au/business/business-rights-protections/fines-penalties>; Evidence Act 1995 (Cth) s 141.
50
Section 224(1)(a)(ii) of the Australian Consumer Law 2010 (Cth); Fines & penalties Australian Competition and Consumer
Commission <https://www.accc.gov.au/business/business-rights-protections/fines-penalties>; s 140 of the Evidence Act
5
1995 (Cth).
Australian Consumer Law 2010 (Cth) ss 224 and 225; ACCC v Energy Watch Pty Ltd [2012] FCA 425, [16].
52
Under s 3(1), the consumer guarantee provisions apply where (a) the price of the goods/services was $40,000 or less; or
(b) the price of the goods/services was more than $40,000 but they are of a type ordinarily acquired for personal, dom-
estic or household use or consumption or (c) the price of the goods was more than $40,000 but they consist of a vehicle
or trailer acquired principally for the transportation of goods on public roads even if they are acquired by a business for
business purposes. However, they will not apply if the goods have been acquired for the purpose of re-supply or for the
purpose of using them or transforming them in trade or commerce in process of production/manufacture or to repair/
treat other goods or fixtures.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW G 79

an agent of the vendors making using of this service, a requirement stipulated under
section 2 of this legislation. It is important to note that section 64 provides that these
provisions cannot be contracted out of unless the supplier is merely limiting the
amount claimable by the consumer, to the actual cost of re-supply.5 4
The case law suggests that online retailers have the same obligations as traditional
retailers under the ACL. This is supported by the decision of ACCC v Scoopon Pty Ltd.ss
Scoopon is an e-commerce marketplace that offers a discounted voucher programme.
In this case, the ACCC initiated proceedings against Scoopon for allegedly contravening
sections 18, in addition to section 29 of the ACL. In particular, it was argued that there
had been breaches of subsections 29(1)(g) concerning the benefits of the service, 29
(1)(i) involving the price of the service and 29(1)(m) with respect a 'right or remedy'.
Firstly, it was argued that Scoopon had represented to a business involved in their
voucher programme, that 20-30% of Scoopon vouchers sold would never be redeemed.
This had been based on the redemption rates experienced by group buying websites over-
seas because at this time, Scoopon could not accurately determine or record how many
vouchers had so far been redeemed in Australia. Scoopon failed to disclose these limit-
ations upon the accuracy of their claim to the business. Justice Greenwood held that
this amounted to misleading or deceptive conduct under section 18 and a false or mis-
leading representation that its services had particular benefits which they may not have
had for the purposes of section 29(1)(g). 5 6
Secondly, the ACCC alleged that Scoopon had represented to businesses that there was
no risk of costs or losses associated with running a deal and that all costs incurred by
Scoopon would be included in its commission. This, however, was inconsistent with the
agreement between Scoopon and the businesses which stipulated that businesses
were required to indemnify Scoopon against 'all loss, costs, expenses, actions or claims
directly or indirectly suffered by Scoopon'. The court concluded that this amounted to mis-
leading or deceptive conduct under section 18 and a contravention of both sections 29
(1)(g) and 29(1)(i) (false or misleading representation with respect to the price of its
services).s7
Thirdly, it was argued that Scoopon had represented to consumers who would buy
coupons from their website, that they had no refund rights if they attempted to
redeem a Scoopon voucher during its validity period but when no service was available.
Justice Greenwood found that these representations 'did not always accurately reflect
the rights of these consumers' and therefore amounted to contravention of the statutory
consumer guarantees, misleading or deceptive conduct under section 18, and the making
of a false or misleading representation with respect to existence of guarantees under Div 1
58
of Part 3-2 (under section 29(1)(m)).

53
Dan Simpson, Media release: Is eBay selling consumers short? (4 November 2011) Consumer Action Law Centre <http://
consumeraction.org.au/media-release-is-ebay-selling-consumers-short/>; Buying at Private Sales or an Auction (2 Septem-
ber 2016) Queensland Government <https://www.qld.gov.au/law/your-rights/consumer-rights-complaints-and-scams/
buying-products-and-services/guarantees-warranties-refunds/buying-at-private-sales-or-an-auction/>; s 2 of the ACL
defines auctions as 'conducted by an agent of the person (whether the agent acts in person or by electronic means)'.
54
Australian Consumer Law 2010 (Cth) s 64A(1).
ss[2014] FCA 820.
56[2014] FCA 820, [17].
57
at 27.
58
at 28-36.
80 K. KARIYAWASAM AND S. WIGLEY

Fourthly, the ACCC alleged that Scoopon had misrepresented to consumers the price of
products in their email advertisements. The emails depicted a pair of Ugg Boots with a
specified price of $45 without any further qualification being provided. When consumers
clicked on this deal within the email, they were taken to a website which presented a
selection of different sized Ugg Boots for purchase at different prices. Only a smaller
style of Ugg Boots could be purchased for $45 whereas other Ugg Boots depicted in
the email were priced $99. Similar representations were made in relation to 3-piece Sam-
sonite luggage packs where the website link indicated that these products could be pur-
chased for $155. This price however, only related to a single piece of Samsonite Luggage
and the 3-piece set depicted in the email was actually $499. A further incident occurred
with respect to Electronic Blankets which were advertised for a specific price of $29
however this only applied with respect to the smallest sized blanket. The other sizes
ranged in price from $35 to $55. The court found that these practices amounted to a con-
travention of both sections 18 and 29(1)(i) of the ACL. Scoopon was subsequently fined $1
million for making false or misleading representations to both businesses and consumers.
Generally, the courts interpret the scope of 'misleading and deceptive conduct' with
respect to online advertising and shopping, very broadly. This is reflected for example, in
the recent decision of ACCC v Valve Corporation (No 3).59 This case involved Valve Corporation
('Valve, a company based in Washington State in the United States, who operated a distri-
bution service for computer games called 'Steam' via the Internet.60 Steam made available
approximately 4000 video games and had 2.2 million Australian subscriber accounts. The
ACCC argued that Steam had made representations in their Subscription Agreements and
Steam Refund Policies, that consumers were not entitled to a refund for digitally downloaded
video games in any circumstance and that this practice was in breach of the ACL.
Justice Edelman agreed finding that these statements amounted to misleading and
deceptive conduct under sections 18(1) and 29(1)(m) of the ACL because they contra-
vened two further provisions of the ACL: section 54 which guarantees that goods be of
acceptable quality and section 64 which provides that no limitations can be placed on
the operation of this guarantee.6 ' The ACCC also submitted that separate representations
made by Valve in their Steam Refund Policies indicating that a consumer had no entitle-
ment to a refund for digitally downloaded video games purchased from Valve unless
required by local law, were in breach of the ACL. Justice Edelman however, disagreed
and in doing so, established that it was indeed correct that Valve's rights were subject
to local laws such as the ACL.6 2
It was further argued by the ACCC, that statements were made by Steam Support staff
through online chats, that no refunds were available for faulty games in contravention of
the ACL. The court had found however, that the Steam Support staff further qualified these
statements by indicating that no refunds were available because the users had continued
to use the games for four to five hours after purchase. Justice Edelman concluded that the
ACL had not been breached as there had been no 'absolute representation that there was
no refund remedy available whenever the goods had been used'.

59[2016] FCA 196.

60[2016] FCA 196, [1].
61 [2016] FCA 196,
[44].
62a 322-399.
63a 322-399.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW G 81

Valve had argued that they did not engage in the supply of goods for the purposes of
section 29(1)(m). Justice Edelman however, disagreed and in doing so, found that the crux
of providing games by Valve, involved a supply of computer software, which amounted to
a good under section 2 of the ACL. Finally, Valve tried to escape liability under the ACL on
jurisdictional grounds. It argued that it did not engage in conduct in Australia because
their physical office and website were located in Washington State in the United States,
and they received payment in US dollars. Justice Edelman, however, rejected this view
and found that Valve did fall within the jurisdiction of the ACL. Valve had $1.2 million
worth of servers in Australia (in which they deposited Steam content) for their 2.2
million Australian subscribers. Furthermore, all payments were made to the Australian
bank account of an Australian company.
This decision is important because it confirms that the ACL will apply to transactions
involving sales to Australian consumers by an online overseas provider. In response to
this decision, ACCC Chairman Rod Sims has stressed that:

The Federal Court's decision reinforces that foreign based businesses selling goods and/or ser-
vices to Australian consumers can be subject to Australian Consumer Law obligations, includ-
ing the consumer guarantees.

The ACL has also been applied in proceedings involving online advertising channels such
as Google AdWords. In Google Inc v ACCC for example,6 5 the ACCC commenced proceed-
ings against Google for misleading and deceptive conduct under section 52 of the Trade
Practices Act 1974 (Cth) (now section 18 of the ACL). Google's advertising service, AdWords,
allowed advertisers to display a sponsored link adjacent to normal Google search results.
This required advertisers to choose certain keywords which would trigger the display of
their advertisement when these keywords were searched for by users. The ACCC had
found that on various occasions between 2005 and 2008, advertisers had used keywords
containing the names of their competitors. For instance, STA Travel had purchased the
name of their competitor, Harvey World Travel, as a keyword such that whenever a user
typed in 'Harvey World Travel' using the Google search engine, STA's website would be
displayed as a sponsored link.
The ACCC had alleged that Google engaged in misleading or deceptive conduct by
publishing and displaying the links, even though they did not endorse the misleading
advertisements. Google argued that it could not hold full responsibility merely because
it implemented the instructions by the advertisers. It had no control over an advertiser's
choice of keywords.
At first instance, Justice Nicholas found that Google was not responsible for these contra-
ventions as it was a 'mere conduit' for the advertiser's misleading or deceptive represen-
tations. This was because Google did not endorse those representations and simply
represented that they were advertisements paid by a specific company. On appeal, the
Full Federal Court unanimously found Google liable. In doing so, they established that
Google was more than a 'mere conduit' because the placement of the advertiser's

64
Federal Court finds Valve made misleading representations about consumer guarantees (29 March 2016) Australian Com-
petition & Consumer Commission <https://www.accc.gov.au/media-release/federal-court-finds-valve-made-misleading-
representations-about-consumer-guarantees> accessed 18 November 2016.
65[2013] HCA 1.
82 G K. KARIYAWASAM AND S. WIGLEY

sponsored (misleading) link below the search term indicated that the content was respon-
sive to their search enquiry.
The High Court, however, unanimously held that Google was not liable for misleading
or deceptive conduct because Google did not create or produce any of the misleading
material and simply responded to a user's request for information. The High Court con-
firmed that Google, like other intermediaries, had no control over an advertiser's choice
of keywords.

The fact that the provision of information via the internet will - because of the nature of the
internet - necessarily involve a response to a request made by an internet user does not,
without more, disturb the analogy between Google and other intermediaries. To the extent
that it displays sponsored links, the Google search engine is only a means of communication
between advertisers and consumers. 6

Justice Nicholas' reasoning was highly persuasive because it argued that ordinary and
reasonable users would have realised that the sponsored links were not endorsed by
Google and were instead made by advertisers. This decision reinforces the fact that
online advertisers, rather than intermediaries like Google, will be primarily liable for mis-
leading or deceptive conduct.
In some instances, vendors may seek to advertise or represent limited refund policies
for instance, by explicitly stating that no refunds will be provided. As mentioned briefly
through our previous discussion of the ACCC v Scoopon Pty Ltd decision however,
Section 29 (1)(g) of the ACL prohibits a supplier from making false or misleading mis-
representations about the existence, exclusion or effect of any condition, warranty,
guarantee, right or remedy. Stating to a consumer that they do not have the right
to a refund may therefore amount to a breach of this provision.6 " This is because,
under Part 5-4 of the ACL, consumers may be able to claim a refund in the event of
a breach by the supplier, of any of the Consumer Guarantees listed under Part 3-2
of the ACL. If a supplier has stated that a consumer does not have a right to a
refund, they have essentially made a false and misleading statement to the consumer
regarding their legal rights.6 9 Michael Sutton, Senior Associate of Dibbs Barker has
enunciated that:

[M]anufacturers, retailers and suppliers of services to 'consumers' ... must ensure that they
have a clear understanding of the extent of 'consumer' statutory rights under the ACL, and
have in place processes to ensure that they do not misrepresent those rights. These statutory
rights cannot be excluded, restricted or modified, whether through a manufacturer's warranty

66at 69.
67
The primary judge's findings about the way in which ordinary and reasonable users of the Google search engine would
understand the sponsored links were not disturbed in the Full Court. These findings - that ordinary and reasonable users
would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and
was merely passing on for what they were worth - were plainly correct. They also support the conclusion reached above.
On its face, each sponsored link indicates that its source is not Google, but an advertiser. The heading 'Sponsored Links'
appears above both top left sponsored links and right side sponsored links, and the URL of the advertiser, appearing
within each sponsored link, clearly indicates its source. Ordinary and reasonable users of the Google search engine
would have understood that the sponsored links were created by advertisers. Such users would also have understood
that representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed
by Google.
68
Warranty and Refund Australian Government - The Treasury <http://www.treasury.gov.au/Policy-Topics/Business/Small-
Business/Legal-Topics/Fair-Trading/Warranty-and-refund> accessed 2 September 2016.
69
Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653, [9].
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW G 83

or otherwise. Businesses must appreciate that these statutory rights will exist regardless of the
scope of the manufacturer's warranty. 70

These legal requirements have been reflected in the activities of the ACCC who have taken
action in the courts against those who have been involved in such breaches including
when such representations are made on websites. 7 ' This occurred in the Federal Court
decision of Australian Competition and Consumer Commission v Spreets Pty Ltd.7 2 This
decision involved the court finding breaches of section 18 of the ACL in addition to 29
(1)(m) which prohibits making a false statement regarding the consumer guarantees
such as the right to obtain a refund. 3 The breaches were in relation to offers made by
Spreets on their website stating that with respect to the purchase of vouchers for holi-
days, 74 meals and skydiving,7 5 'cube storage units', 7 6 and wine aerators, refunds were
either not applicable or were could not be claimed outside of a seven-day time limit.7 7
The ACL also prohibits a person, in trade or commerce, from engaging in Unconscion-
able Conduct.7 " Deane J. in Commercial Bank ofAustralia vAmadio described unconscion-
able conduct as follows.

Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or
retain the benefit of, a dealing with a person under a special disability in circumstances where
it is not consistent with equity or good conscience that he should do so.7 9

The terms 'special disability' has been defined broadly by the courts to include any type of
disadvantage including a lack of understanding or expertise in a particular area compared
to another stronger party.8 o The ACL has two substantive provisions relating to uncon-
scionable conduct. Section 20 prohibits unconscionable conduct 'within the meaning of
the unwritten law'.81 Section 21 prohibits unconscionable conduct in relation to the pro-
vision of goods and services. Section 20 can only be relied upon in instances in which
section 21 cannot apply.8 2 As with section 18, both sections 20 and 21 are civil penalty
provisions and hence, do not attract criminal penalties. Unlike with section 18, however,
a breach of these provisions also attract civil pecuniary penalties. 8 3
The question then arises as to whether or not these provisions can apply with respect to
online advertising where an advertiser in a stronger position is seeking to take advantage
of a target audience holding special disabilities. It is arguable that section 21 applies to
online advertising as it can be relied upon when there has been a 'supply or possible

70
Michael Sutton, The importance of not misrepresenting consumer rights: Hewlett-Packard fined $3 million (9 July 2013)
Dibbs Barker <http://www.dibbsbarker.com/publication/The-importance-ofnotmisrepresentingconsumerrights
Hewlett-Packardfined_$3_million.aspx> accessed 3 October 2016.
71
Spreets to pay penalties of $600,000 for misleading consumers (24 April 2015) Australian Competition and Consumer Com-
mission https://www.accc.gov.au/media-release/spreets-to-pay-penalties-of-600000-for-misleading-consumers accessed
13 September 2016.
72[2015] FCA 382.
7[2015] FCA 382, [15]-[16].
74
1bid [19].
75
lbid [18].
76
1bid [20].
77
lbid [18]-[21].
78
Australian Consumer Law 2010 (Cth) ss 20-22.
79(1983) 151 CLR 447, 474.
8
oGarcia v National Bank of Australia (1998) 194 CLR 395; See also Bromley v Ryan (1956) 99 CLR 362.
8
This section does not apply to conduct that is prohibited by s 21.
82
Australian Consumer Law 2010 (Cth) s 20(2).
83
See Chapter IV of the Australian Consumer Law 2010 (Cth) generally.
84 C K. KARIYAWASAM AND S. WIGLEY

supply' and 'acquisition or possible acquisition' of goods and services. That said, non-
online advertisements such as advertising on television, radio or in newspapers, maga-
zines are deemed to be mere invitations to treat. This is because a reader can elect to
either act or not act upon the advertisement. Acting upon the advertisement requires a
further step on the part of the purchaser. This can include for example, after seeing an
advertisement for a sale on a Sunday night, actually turning up at the store on Monday
to inspect the item advertised. It may be difficult to argue that non-online advertisements
are a process that occurred in the actual or possible supply of goods/services under
section 21 of the ACL because an invitation to treat unlike an actual offer, may be
deemed as falling short of the definition of supply.
Online advertisements on the other hand, differ from non-online advertisements in
that most if not all of them are a combination of both an invitation to treat and an
entry into a contract because they encompass an immediate capability of a follow
through from the invitation to treat to the offer, acceptance and consideration and
ending in a completed contract. This is because most if not all online advertisements
immediately provide a customer who clicks an advertising link with the immediate
ability to buy a good or service (making an offer by adding an item to a shopping
cart), pay for a good/service (the provision of consideration via credit card approval)
and facilitate acceptance by the advertiser (through pre-payment confirmation of the
order). This for example, occurs through the use of the Ad-tractS8 4 online advertising
platform. What is happening here is beyond normal advertising due to the fact that
completion of the contract is immediate. It could therefore be argued that there is a
supply or possible supply of services and therefore, online transactions fall within the
scope of section 21.
Section 22 of the ACL provides a list of factors that courts may consider in determining
whether unconscionable conduct has occurred under section 21:

(a) Section 22(1) (c) provides that consideration should be given as to whether the cus-
tomer is 'able to understand any documents relating to the supply or possible supply
of the goods or services'. This may apply to a customer's comprehension of the con-
tract terms or the click-through process or ability to pull out of the order process if the
customer changes their mind before contract completion;
(b) Section 22(1) (d) prohibits the use of 'unfair tactics'. This may apply to deliberately
minimised or 'hidden' contractual terms in Ad-tracts. These terms may be 'hidden'
in the sense that a customer might have to go pass through several web pages in
order to read terms and conditions which are presented in small font. This would
amount to an overall deliberate crafting of the ad-tract to capitalise on a customer's
immediate desire to purchase quickly rather than spending time on locating and
reading contractual terms before making an offer;
(c) Section 22(e) stipulates the court may account for 'amount for which, and the circum-
stances under which, the customer could have acquired identical or equivalent goods
or services'. Technically, in order to meet the requirements of this sub-section, an ad-
tract would have to represent that similar goods/services were not only available to
the customer but easily 'searchable' or 'locatable' to that customer on the Internet;

84
Ad tracts is a free text ad exchange that offers free Internet marketing and advertising.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW G 85

(d) Section 22(i) and (ii) provides that consideration should be given to the'extent to which
the supplier unreasonably failed to disclose ... any intended conduct ... that might
affect the interests of the customer; and any risks ... arising from the ... intended
conduct [which] ... the supplier should have foreseen would not be apparent to the
customer'. This sub-section would basically cover any non-disclosure of any information
in an ad-tract, which so long as it was not reasonable to withhold that information in the
ad-tract, would then make that ad-tract or a part of the ad-tract unconscionable;
(e) Under section 22(k), the court may account for a contractual right to vary unilaterally a
term or condition. This sub-section might apply to a failure by an ad-tract to either
provide or fully explain the right of a supplier of goods/services to vary contractual
terms either before or post completion. Again, such terms being hidden away and
not prominent in an ad-tract may render an online transaction unconscionable on
these grounds;
(f) Section 22(1) provides that consideration should be given to 'the extent to which the
supplier and the customer acted in good faith'. This sub-section has very wide appli-
cability to online advertising depending on the current and future development of
'good faith' at common law.

In summary, the unconscionable conduct provisions apply to online advertising in the

same way they apply to conventional advertising media, such as print newspapers, bill-
boards, televisions, radios and so on. However, in a submission to a 2013 Senate
Inquiry, the Australian Securities & Investments Commission (ASIC) stated that:

The courts have set a high bar for establishing unconscionability particularly for commercial
transactions. Whether a specific transaction is unconscionable depends on the individual
facts and circumstances of the case. A general power imbalance between parties or a contract
that favours one party more than the other is not sufficient to support a claim of unconscion-
able conduct.8 5

One of the key failings of hard regulations relates to the fact that many of the small
businesses that engage in these illegal practices operate overseas, and thus it is difficult
for the supplier to be held accountable because they are not operating within Australia's
legal jurisdiction. Pursuing a case against an overseas party in this context can be extre-
mely costly with many affected persons unable to meet this cost:

Unfortunately, the remedies which are available to those who have been deceived electroni-
cally are often practically unavailable as they would require offenders to be extradited from
other places or victims to take cross-border legal proceedings. Such action is invariably
beyond the means of most individuals and costs far in excess of the amount lost in most con-
86
sumer frauds.

It is also not uncommon for businesses who engage in misleading and deceptive adver-
tising to be set up in such a way that they can be closed down quickly once their illegal

85
Australian Securities and Investments Commission, Senate Inquiry into the performance of the Australian Securities and
Investments Commission - Submission by ASIC on reforms to the credit industry and 'low doc' loans, October 2013, p. 6,
quoted in <http://consumeraction.org.au/wp-content/uploads/2015/07/Unfair-Trading-Consumer-Action-2015-Online.
pdf> at 12.
86
Russel G Smith, 'Deceptive and Misleading On-line Advertising and Business Practices' (Australian Institute of Crimi-
nology, 4-5 October 2000) 11 <http://www.aic.gov.au/media_1ibrary/conferences/other/smith-russell/2000-10-crf.
pdf> accessed 2 October 2016.
86 K. KARIYAWASAM AND S. WIGLEY

practices are discovered, and then set up again under a different name. Because of this, cus-
tomers are quite often unaware previous breaches of consumer law that the supplier have
engaged in.87 However, Professor Justin Malbon is of the view that it is likely that the Aus-
tralian Consumer Law will apply for goods imported into Australia from other countries as a
result of an online purchase. The effect of section 5 of the ACL provides that the Australian
Consumer Law applies with respect to causes of action arising from conduct that has
occurred abroad. Furthermore, Malbon has stressed that the Oxford Dictionary defines
'supply' as 'to provide' and 'provide' as 'make available'. This infers that supply does not
occur until the consumer can physically access the goods that have been purchased,
which will only occur in Australia. This interpretation is consistent with that adopted by
the Federal Court in ACCC v European City Guide,"" where it was held that the sending of
misleading forms to Australian clients from a business operated and registered in Spain
was subject to Australian law concerning misleading and deceptive conduct. 9

Soft interventions to prevent misleading and deceptive advertising

The main methods of soft intervention to prevent misleading and deceptive advertising
from occurring is through educating and informing consumers of known scams, risks,
illegal schemes and providing resources to the public so that they can alter their online
behaviour.
More informed consumers are less likely to be disadvantaged by practices which breach
consumer law. By preventing such transactions from occurring in the first place, hard regu-
lations do not need to be relied upon. This has the effect of saving time, expense and stress
on the part of consumers. Though, it is unrealistic to assume that education can eradicate
consumers from falling for misleading and deceptive advertising completely, an online
consumer savvy public would result in there being less opportunity for it to occur. This
is based inter alia upon the premise that if these 'businesses' were not making money
from their expected methods (i.e. scams), they would have to look elsewhere to make
money and discontinue these practices. Although not as direct as hard regulations,
these soft forms of intervention, when utilised widely, are pervasive and arguably more
effective than hard regulations.
This method of informing and educating the public has been proven to be'highly effec-
tive' when dealing with other illegal business practices, like fraud.90 In 2007, the Australian
Consumer Taskforce launched a campaign highlighting the methods of protecting consu-
mers against scams using the theme,'Scams target you - protect yourself'. Its preventative
measures were largely initiatives that every day people could employ at home to alter how
they managed their personal information and conducted themselves online. The govern-
ment worked with businesses and NGOs, and this was found to be very effective with this
strategy also being used in later campaigns.91

87
lbid.
88[2009] FCA 1206.
89
Justin Melbon, Application of Australian Consumer Law to Overseas Internet Purchases (2013) Monash University Faculty of
Law <http://www.monash.edu/law/about-us/news/expert-legal-commentary-application-of-australian-consumer-law-
to-overseas-internet-purchases> accessed 8 September 2016.
90
Russell G Smith and Tabor Akman, 'Raising Public Awareness of Consumer Fraud in Australia' (Trends & issues in crime
and criminal justice, no. 349, February 2008) <http://www.aic.gov.au/publications/current%20series/tandi/341-360/
tandi349.html> accessed 6 October 2016.
9
ilbid.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW 87

Other intervention strategies have been incorporated into websites, like the ACCC and
Scamwatch.gov.au, that actively update their scam watch lists to alert consumers of
methods of schemes/scams that are being used and the names of organisations known
for perpetuating these scams. 92 These initiatives go far in reaching online consumers,
however, more awareness needs to be raised of these resources so that consumers use
them more frequently, rather than visit them after they have been scammed. Other pre-
ventative measures than can assist in consumer activities online include ensuring that
their antivirus software is update to date and a robust system, as antivirus software has
the ability to detect websites with uncertain credentials.
Furthermore, the Australian Guidelines for Electronic Commerce have been introduced as
a form of soft regulation, with the aim of enhancing consumer confidence by providing
guidance to businesses on how to deal with consumers when engaged in Business-to-
93
Consumer electronic commerce. It is important to note that these guidelines are not a
replacement for consumer protection laws. 94 These guidelines include for example:

(a) Paragraph 15.2 - Businesses should not make false or misleading representations
about the goods or services they supply;
(b) Paragraph 15.7 - Businesses should ensure that services supplied are rendered with
due care and skill and are reasonably fit for any purpose made known to the supplier
by the consumer;
(c) Paragraph 18.1 - Businesses should 'make sure advertising material is clearly identifi-
able and can be distinguished from other content, such as editorial comment, terms
and conditions and independent product reviews' and
(d) Paragraph 18.3 - Businesses should 'be able to back up their advertising or marketing
claims'. 95

Cooling-off rights with respect to online advertising

Cooling-off periods are lengths of time in which a consumer has the legal right to no
longer continue with an agreement for the supply of goods and services. According to
Australian Consumer Law, consumers automatically have a cooling-off period with
respect to purchases that have been made by way of an 'unsolicited consumer agreement'
and this is specifically provided for under the Australian Consumer Law. 9 6 This termination
period is 10 business days starting from the day after the agreement was entered into with
respect to sales not made over the telephone. For telemarketing, the termination period
is 10 business days starting from the day after the documentation containing the agree-
ment is given to the customer.
Unfortunately, the Australian Consumer Law however, defines an unsolicited consumer
agreement as only including those made in person or over the telephone and therefore,

92
The Australian Competition and Consumer Commission at <https://www.accc.gov.au/publications/the-little-black-book-
of-scams> accessed 15 December 2016.
93
94
The Australian Guidelines for Electronic Commerce Introduction, Para 2.
Para 11.
95
See the Australian Guidelines for Electronic Commerce.
96
Australian Consumer Law 2010 (Cth) s 69(1).
97
Australian Consumer Law 2010 (Cth) s 82(3)(a).
98
Australian Consumer Law 2010 (Cth) s 82(3)(b).
88 K. KARIYAWASAM AND S. WIGLEY

the rights conferred under this particular legislation, do not extend to consumers who
have made purchases online.99 It can therefore be inferred that the right of consumers
to a cooling-off period with respect to Internet purchases would be limited to the specific
terms of the agreement between the supplier and the purchaser.

Innocent misrepresentation
An innocent misrepresentation is an incorrect statement of fact made without an intention
to mislead or deceive and without the maker knowing that they have made a false state-
ment or created a wrong impression. It can also arise from a non-disclosure of facts. Gen-
erally speaking, common law did not provide any remedies for innocent
misrepresentations. There were, however, limited exceptions to this rule such as when it
could be established that the representation formed a term of the contract,1 00 in which
case, the common law remedies of damages (for a breach of a warranty) and termination
and/or damages (for a breach of a condition) would apply.10' Alternatively, it could be
argued that there was a common mistake as to the fundamental substance of the contract
occurred between the parties. 1 0 2 Outside of these circumstances however, remedies could
only be sought via equity. On this basis, a consumer would be able to bring an action for
the rescission of the contract in equity. In most cases, this would involve a return of the
goods purchased online and a refund.

Conclusion
As this article has revealed, the existing legal protections available to online consumers are
those that have developed in relation to traditional forms of commerce and have not yet
addressed the various idiosyncrasies of online misleading advertising. The challenge for
policy-makers is therefore how to adopt more responsive regulations on online advertis-
ing. Cunningham and Grabosky propose the adoption of 'smart regulation', which involves
taking a more holistic approach through the use of educative, deterrence-based, respon-
sive and targeted initiatives.0 Such an approach would not represent a threat to the exer-
cise of formal regulatory power exercised by the state, but would instead be an expansion
of the base of control. It is said that in the case of the online consumer market, those bases
of control may be found through the exercise of informal regulatory power by firms and
consumers. 1 0 4 Malbon builds on the approach intimated by Cunningham and Grabosky by
suggesting an 'alliance approach'. This approach would require the identification of
sources of power which could be harnessed to attain the desired results of public
policy.10 5 In the case of misleading and deceptive conduct, the companies engaging in
such activities would be those exercising power. Once identified, the next step is to ident-
ify the ways in which the regulator can act in alliance with the parties that exercise those

99
Australian Consumer Law 2010 (Cth) s 69(1)(b).
00
Academy of Health and Fitness Pty Ltd v Power [1973] VR 254 at 264.
oOscar Chess Ltd v Williams [1957] 1 WLR 370, 374 per Denning LI.
102
Bell v Lever Brothers Ltd [1932] AC 16.
103
Robert Baldwin and Julia Black, 'Really Responsive Regulation' (2008) 71 MLR 59, 63.
%Justin Malbon, 'Taking Fake Online Consumer Reviews Seriously' (2013) 36 JCP 139, 151.
1osIbid.
 INFORMATION & COMMUNICATIONS TECHNOLOGY LAW 89

sources of power.1 06 This approach would work most effectively where the public policy
aims to align with those that exercise the power.'07 Although this approach is unlikely
to solve the problem of misleading and deceptive conduct in advertising, it offers a poten-
tial means for reducing instances of its use in an online consumer market.

Acknowledgment
Kanchana Kariyawasam wish to thank Erika Menezes for her research assistance.

Disclosure statement
No potential conflict of interest was reported by the authors.

106
1bid.
107
justin Malbon, 'Taking Fake Online Consumer Reviews Seriously' (2013) 36 JCP 139, 151.