How Much Are Words Worth In Consumer Law?

ABSTRACT

Consumer laws are essential to regulate trade concerning consumers, safeguard consumer rights and interests as well as provide a mechanism for redress. However, it is insufficient if consumers themselves are ignorant and display apathy towards the rights available to them under the law. Therefore, this paper seeks to illustrate how the law may be used in cases of unfair trade practices specifically on misleading conduct and false and misleading representations. Due to the obvious scarcity of decided cases in our jurisdiction, references will be made to cases from Australia. It is hoped that this work provides useful information and instills awareness among readers on their rights under consumer law.

Netizens were recently abuzz about Nestle’s Milo following a video purportedly exposing the ‘lie’ of the company projecting its product as a nutritious drink. While it was described as containing only 6% of sugar for each serving; in truth, there was 40g of sugar for every 100g of the powder. Such claims were at first refuted by the company in Malaysia. [1] However, Nestle had dropped its 4.5 Health Star ratings for the products in Australia and New Zealand.[2] No equivalent statements or conduct was made by the company in Malaysia. Some argue that protests by consumers were tantamount to making a mountain out of a molehill, as they can still exercise their choice to purchase or not. Nevertheless, this highlights the lack of consumer awareness among Malaysians. This triggers a need for discussion in the area of unfair trade practices, especially on misleading conduct and representations.

Recognizing the Parties in a Consumer Contract

According to S. 2 of the Consumer Protection Act 1999 (“CPA 1999”), consumer refers to a person who acquires or uses goods or services of a kind ordinarily acquired for personal, domestic or household purpose, use or consumption. The term, ‘or uses’ in this provision effectively removes the hindrance of the doctrine of privity of contract,[3] as any person who makes use (without having to purchase or acquire) any products or services may seek redress under this Act. This is of course, accompanied by the rider that it must strictly be for household, personal or domestic purposes; if goods or services are for the purpose of trade, then they are not customers under the ambit of this Act.[4]

Meanwhile, a manufacturer is defined under the same Section as the person who conducts the business of assembling, producing or processing goods. It includes a person who portrays himself as the manufacturer of the products to the public, affixes his mark or brand to the product or allows such affixation to take place as well as an importer or distributor (if goods were imported).[5] It can be seen that in order to be held liable as a manufacturer, one need not necessarily manufacture those products himself. The liability extends to those who appear to be the manufacturer. Clearly, such wide a provision is favorable to consumers, as limiting the definition may make it an arduous task for consumers to seek redress for any damage, loss or injuries suffered.

Supplier refers to a person who supplies goods in trade involving the transfer of ownership or possession to a consumer under a contract of sale, exchange, lease, or hire purchase.[6] To put it simply, a supplier is a middle person between the consumer and manufacturer. They are usually retailers or resellers. Ordinarily, these three parties are usually parties to a consumer contract. If any consumer rights or any provisions under the CPA 1999 have been breached, usually the supplier and/or the manufacturer would be held liable.

Misleading Consumers through Words or Conduct

When a consumer is misled by statements made in accordance to the products bought, a few basic rights are infringed including the right to information, the right to choice as well as the right to be protected against unfair trade practices.[7] What amounts to be misleading is to be decided through an objective test under the CPA 1999. According to S. 8 of the CPA 1999, ‘false’, ‘misleading’ or ‘deceptive’ in the context of conduct, representation or practice means an act which is capable of leading a consumer into error. The threshold is set according to the perception and intelligence of an ordinary consumer. It is also pertinent to note that true or actual deception need not be established. Due to the lack of decided cases in Malaysia, illustrations and explanations will be drawn from cases decided in Commonwealth jurisdictions. In the Australian case of Google Inc. v ACCC[8], it was held that the words “likely to mislead or deceive” mean that it is not a requirement to prove actual deception in order to establish a contravention.[9] The duty of the court is to weigh in whether the ordinary or reasonable members of that class would be misled or deceived.

S. 9 and 10 of the CPA 1999 has prohibited misleading conduct and false and misleading representation. However, no interpretations were given in setting the parameters of what falls under the ambit of ‘conduct’ and ‘representation’. Prima facie, it seems to suggest that ‘conduct’ is wide enough to cover the acts of making ‘representation’. According to S. 9(a) of the CPA 1999, it prohibits any person from engaging in conduct which in character, is misleading or deceptive or has the likelihood to mislead or deceive the public in regards to the nature, manufacturing process, characteristics, suitability for purpose or quantity to of the said goods. This would similarly, apply to services as well.[10]

In ACCC v Coles Supermarket Australia[11], the Federal Court held that Coles misled consumers with representations on the bread sold in the defendant’s in-house bakeries. The packaging stipulated that it was ‘Baked Today, Sold Today’ and ‘Freshly Baked In-Store’. In truth, these products had been ‘parbaked’ i.e., they were partially baked and frozen off-site by supplier and sent to and completely baked at in-store bakeries. The court held the defendant liable for misleading or deceptive conduct and making false or misleading representations. In another Australian case, Noone, Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc & Ors[12], the defendants were found liable for engaging in misleading and deceptive conduct. They represented that the ‘The Hope Clinic’ methods could slow, stop or reverse the development of cancer, and that the treatments offered were backed by scientific support.

In analyzing these cases, it is apparent that the simplest inaccurate description to a serious statement in regards of human health may be caught up within the ambit of misleading conduct. The cases also indicate that those who made misleading or false misrepresentation may also be caught up for partaking in misleading conduct. However, the former is a lot more specific in nature. According to S. 10 CPA of the 1999, there is a long list of criteria in which a false or misleading representation can be made.[13] For example, under Para(a), false or misleading representations can be made in relation to the kind, standard quality, grade, quantity, composition, style or model. There are a few Australian cases which may be used to illustrate the application of this section. In Trade Practices Commission v Pacific Dunlop Limited[14], the defendant had labelled socks manufactured by them as made with “pure cotton”. However, the socks were in fact not made with pure cotton. They were found to have engaged in false and misleading representation.

In another case, ACCC v Pirovic Enterprises Pty Ltd No. 2[15], the defendant produced eggs and supplied them in cartons labelled ‘free range’. Its produce were also promoted as being laid by hens that lived in spacious barns and could roam freely in an outdoor area. It was however, admitted that most of its hens did not move about freely on an open range on most days. Hence, the defendant had made misleading representation. There was another case with almost alike factual matrix, i.e. ACCC v Pepe’s Ducks Ltd[16]. In this case, it regarded ducks represented to be bred and raised in an open range surrounding, when in fact the ducks were raised exclusively in indoor sheds. The defendants in these two cases were found liable for making an inaccurate representation regarding to their produce.

In studying these case laws in Australia, there is an irresistible inference that the level of consumer awareness is a lot more robust than that in Malaysia, given that there are no cases (or perhaps no cases reported) concerning misleading conduct nor false and misleading representation. By right, manufacturers or even anyone who had made such representations or engaged in such conducts must ensure that the goods or services strictly and accurately adhere to the descriptions. In Australia, for example, those who contravene consumer laws are made to pay a hefty price by the courts. In ACCC v Apple Pty Ltd[17], iPads were advertised in such a way which implied that they can be used on networks described as 4G, but in truth it was not able to secure connection to one of the mobile data networks in Australia. Apple was fined $2.5million. In our country, it is less likely that consumers would be bothered by matters like that.

One of the most integral objects of consumer law is to uphold the rights of consumers in receiving information and for the matter of fact, accurate and true information in relation to their purchase or consumption. It is also to prevent consumers from being misled by dishonest and unethical parties. Hence, consumers in Malaysia must exercise their rights well. Having consumer laws in place is futile if consumers themselves do not know how to utilize those laws to their benefits.

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