If you can’t back it up, don’t say it
Guidance for traders on false, misleading and unsubstantiated representations
Free range eggs!
New Zealand grown!
Every day consumers are hit with countless claims like these, and asked to take them at face value.
“Well I’d like to think that what they’re telling you is true."
"I generally trust the labelling around free range eggs and things like that."
"As long as it’s certified and you can prove it."
"Quite suspicious, because I mean who’s to know where they actually come from."
"We’re taking the word of, y’know, the guys that make ‘em.”
“All your claims must be accurate, and you must be able to back them up. That’s especially true for claims your customers can’t check for themselves. I can check how much this apple weighs. I can’t check if it’s New Zealand grown or if it’s organic.”
In this video you’ll get guidance on false, misleading, and unsubstantiated representations, and how to avoid them.
So first thing – it’s an offence to make a representation, a claim, that is unsubstantiated.
“That’s a claim you don’t have reasonable grounds to make. You can’t back it up.”
For example, a heat pump supplier made claims about the efficiency of some of its heat pumps – but it couldn’t back them up. It was fined 125 thousand for unsubstantiated representations, and 185 thousand more for other misleading claims.
An Australian paint manufacturer claimed its paint range reflected heat and lowered the temperature inside up to 10 degrees. But the paint company didn’t have enough evidence for that, and it misled its customers. Ouch. Aussie 400 thousand in fines!
Here’s what the law says: A representation is unsubstantiated if the person making it doesn’t - when the representation is made - have reasonable grounds for it, irrespective of whether it’s false or misleading.
So let’s work through that. First you must have reasonable grounds for your claim.
For example, if you’re selling free range eggs or organic chicken, or making similar claims, don’t just use those words.
“Back them up with facts from credible sources. Independent certification might be one good way to do that.”
“The best proof might be to track the product back to the factory. But at least, retain records to show what you ordered and were promised.”
And the bigger the claim, the stronger the grounds you need… hmm, this one would need quite a lot of backing up.
But reasonable consumers won’t expect you to prove this – it’s what’s known as puffery.
One more thing - you must be able to back up your claim when you make it – figuring it out later won’t get you out of trouble.
“So there’s a simple rule for substantiation - if you can’t back it up, don’t say it. And the same rule applies to false or misleading representations.”
They are prohibited under the Fair Trading Act and the Commerce Commission has taken plenty of prosecutions for false or misleading claims.
Like the bee pollen that a health supplement company said was from “the hardworking bees of New Zealand’s pristine wilderness”. The bees and their pollen were actually from China. The company and one of its owners were fined more than half a million dollars.
A chain of stores sold yoghurt which wasn’t actually yoghurt and made misleading health claims. The fines would have been nearly 300 thousand if the companies weren’t already out of business.
And numerous companies and individuals were prosecuted for bogus claims about alpaca and cashmere products.
In one case, a so-called 100 per cent cashmere duvet turned out to be zero per cent cashmere.
Total fines for call cases reached one and a half million dollars.
“So don’t make false or misleading claims. Don’t make claims you can’t substantiate. How? Remember the simple rule… If you can’t back it up, don’t say it.”
For more information on complying with the Fair Trading Act, head to our website. You can download our fact sheet on unsubstantiated representations(external link) .