The consumer watchdog is “on a mission”, according to a leading lawyer, after it announced it had obtained an enforceable undertaking from Toyota Australia into the use of leather claims in the promotion of certain Toyota cars.
The Australian Competition and Consumer found that from at least 2005 to 2009, Toyota Australia described the upholstery, interiors or components of cars in the Camry, Aurion, Prado and Kluger as leather, when in fact the upholstery was only partially leather.
In giving an undertaking, Toyota Australia has admitted it may have engaged in misleading conduct in breach of the Trade Practices Act and has undertaken not to use the description leather in advertising unless it can demonstrate the component is entirely upholstered in leather.
ACCC chairman Rod Sims said in a statement that businesses need to be careful about making claims about the composition of a product.
“The ACCC was concerned that consumers were likely to have been misled by these claims. If consumers are prepared to pay a premium to have quality finishes for their car interiors, they are entitled to get what they paid for,” Sims said.
“These practices affect consumers and competitors alike by creating an unfair advantage and will be taken very seriously by the ACCC.”
A spokesperson for Toyota said in a statement the car maker apologised if any customer felt they were misled as a result of its advertising.
“As soon as we became aware of the issue we changed our advertising materials to ‘leather accent’ or ‘leather accented’,” the spokesperson said.
Toyota said the areas where synthetic material is used are those that are more prone to wear and tear, such as the back of the seat and door trim and this made the areas easier to clean and wear more consistently.
Sally Scott, partner at law firm Hall & Wilcox, told SmartCompany there has been an “incredible volume” of misleading advertising matters pursued by the watchdog since Sims took over as chair.
“There is no doubt that Rod Sims is on a mission to try to stamp out misleading advertising and promotions,” she says.
“One thing is certain. Companies cannot afford to turn a blind eye to whether their advertising and promotional material is misleading.”
Scott says when looking at the claims Toyota made in its advertising the issue is how consumers would interpret the representation.
“The ACCC formed the view, quite reasonably I believe, that a representation that upholstery was ‘leather’ would be read by consumers as being that the upholstery was entirely made of leather,” she says.
She says it is less clear whether representing that a product has “leather accents” or is “leather accented” is misleading.
“If some consumers might interpret a representation in a way that would be misleading, then the representation is misleading.”
Scott says it is interesting that the ACCC chose not to impose a fine on Toyota.
“We have seen a very large number of companies consent to action taken by the ACCC, either infringement notices or court action,” she says.
“This is no doubt reflective of the desire of companies to avoid the expense, time and adverse PR associated with court proceedings.”
The ACCC’s agreement with Toyota follows a Federal Court ruling last week against the watchdog.
The ACCC had brought proceedings against Lux Distributors, claiming the business engaged in unconscionable conduct in selling vacuum cleaners to five elderly women.
The ACCC claimed a Lux sales representative called upon the women in their homes and they were then subjected to unfair and pressuring sales tactics to induce them into purchasing a vacuum cleaner for a price of up to $2280.
However, in a blow to the watchdog, Justice Jessup dismissed the ACCC’s claim, finding that he did not consider Lux had engaged in unconscionable conduct during their dealings with these consumers.
Sims said the ACCC would carefully consider the judgment.
“Unconscionable conduct continues to be an area of priority for the ACCC and it will continue to take enforcement action where appropriate, with a particular focus on conduct involving vulnerable consumers,” Sims said.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
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