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Harvey Norman Fined for Fine Print

Specially prepared legal documents and disclaimers should be displayed on business websites in order to protect business owners against ordinary risks associated with business operations. However, these disclaimers will not provide protection against false statements made in the course of promoting a business. In a recent case, the Federal Court fined Harvey Norman Holdings Ltd $1.25 million for various breaches of the Competition and Consumer Act 2010 (Cth) amounting to misleading and deceptive conduct.
The Facts
The Australian Competition & Consumer Commission (the ACCC) alleged that between the dates of October 2008 and July 2011, Harvey Norman made misleading representations on its company website and in brochures mailed throughout Australia. Then representations indicated that certain products were available at certain prices. However, the reality was that the prices were only available at a few stores Australia-wide.
There were a number of actions of Harvey Norman that created the impression in the mind of the reader that the prices in the brochure and on the website were available Australia-wide, not in a very limited number of locations. These include:

  • the distribution of brochures throughout Australia, giving the impression that the goods were available in Harvey Norman outlets located in areas in which the brochures were distributed;
  • the inclusion of a list of stores on the back of some brochures, giving the impression that the sale prices in the brochure applied to the listed stores, when in fact this was not always the case;
  • the ‘shop finder’ function on all pages of the company website allowing users to find their closest store, without indication that the listed products or sales may not be available at all chosen locations; and
  • the use of the “Harvey Norman ®” trade mark, suggesting involvement of the corporate entity when it actually referred to a group of independent franchisees.

These factors amounted to a significant impression that the prices and products advertised would be available at all Harvey Norman store locations.
The Disclaimers
Harvey Norman had displayed disclaimers on both the brochures and its company website that stated the restrictions on the availability of the products, and also clarified that the products were stocked only by independent franchisees of Harvey Norman.
The court was of the view that despite the use of such disclaimers, they did not overcome the misleading representation of the company website that suggested the prices and products were widely available.
Further, the court felt that Harvey Norman was mindful that customers would not be aware of the inclusion of these disclaimers in the fine print and this conduct amounted to “contemptuous manipulation of the expectations of ordinary consumers”. The court found that Harvey Norman had the intention of marketing to a large customer base, despite the offers in the brochure and on the company website being available at only a few locations.
Disclaimers and legal documents are effective at protecting business owners from risks associated with ordinary business operations. However, as Harvey Norman discovered, a business cannot mislead and deceive customers via representations on a company website, only to include the truth in hidden fine print. Ultimately, a disclaimer will not disclaim you from liability relating to non-compliance with competition and consumer laws.
It is important to be cautious when making general statements and then relying on disclaimers to limit their scope.