Trade Practice Act

Professionals and the Trade Practices Act – DEALING WITH CLIENTS

The services we provide as practising professionals play a vital role in the lives of our clients. Aesthetics as a professional sector and the individual professionals with it, have distinctive characteristics, which separate them somewhat from other businesses. However, professionals, like all businesses, operate within markets, where market forces determine outcomes.

A relative high degree of regulation impacts on the competition that takes place within the market for professional services. This includes government-imposed restrictions, legislation and privately imposed restrictions that operate through self-regulatory arrangements of professional associations and industry standards bodies.

As a professional organisation APAN has a fundamental responsibility to provide a voice for its practising professionals. Part of our responsibility is to not only provide a community of practice within the profession, but also identify and set in place Codes of Conduct that reflect government requirements as well as uphold the integrity of the profession. Another requirement is to familiarise our members with their legal obligations with regards to the laws of the land and how they impact their business and professional activities.

The Trade Practices Act (TPA) sets certain guidelines to promote fair and efficient competition within markets and to provide protection for consumers. Whether you are aware of its laws on not, you are still liable and substantial fines can be imposed on offenders. In this article we will be covering the TPA requirements when dealing with clients.

The TPA stipulates that it is important that practitioners understand these rules and how they apply to their day-to-day operations. Members of APAN may call on the organisation to determine whether their policies and advertising meet with the requirements of the TPA. Some of the most important rules on dealing with clients are as follows:

MISLEADING AND DECEPTIVE CONDUCT
Misleading and deceptive conduct refers to conduct that is prohibited. Generally this type of conduct involves leading someone into error, or being likely to, and includes behaviour such as lying, leading someone to a wrong conclusion, creating a false impression, leaving out or hiding important information or making false or inaccurate claims.

It is irrelevant whether these are done intentionally or not. A business can break the rules by both deliberate and inadvertent actions.

When advertising goods or services, professionals, like businesses, need to consider the overall impression that the advertisement is giving the audience. It should be accurate and contain all essential information. In other words, there must be full disclosure about what they represent. The same applies when negotiating or dealing with clients directly, or in any other way. Any representations made by a professional must be accurate and must be able to be substantiated.

It is also important to remember that there will often be a real imbalance between the level of knowledge held by the professional and that of the general public. The use of technical or scientific terms or jargon that can be misunderstood may create a greater risk of misleading potential clients or consumers.

MISREPRESENTATION
A misrepresentation is where something is conveyed to a client that is not correct or contrary to fact. This may be through the use of, for example, picture, photos, words or statements. A special caution should be mentioned to “before and after” photos that have been either digitally enhanced or the angle of the face is different. Eyes are a perfect example where in the “before” shot the client is smiling thus creating creases and wrinkles around the eyes and not smiling in the “after” shot making the skin look smoother. Difference in lighting is also another issue for concern. The TPA prohibits a range of misrepresentations in relation to specific matters and the characteristics of goods or services and, as with the prohibition of misleading conduct, intention is irrelevant. The rules may be broken regardless as to whether the misrepresentation was deliberate or whether the maker did not know the representation was false at the time it was made.

It is particularly important to think about whether a representation could be creating, or does create, a wrongful impression in the mind of a consumer when making representations about:

  • the characteristics of a good or service
  • the price of a good or service
  • the buyer’s need for a particular good or service
  • future matters (where there is no reasonable ground for doing so)
  • the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.

How to avoid misleading a client:

  • Sell your professional services on their merits and don’t exaggerate
  • Be honest about what you say and do commercially
  • Look at the overall impression of your advertising. Ask yourself who the audience is and what the advertisement is likely to say or mean to them.
  • Remember, at the very least you should consider how the matter will be viewed by a consumer who has little or no knowledge of the professional service.

DISCOUNTING PRICE (or two-price advertising)
This is a very important consideration. Discount pricing involves a comparison of two prices, which commonly comes in the form of “was/now” pricing – and this is often referred to as two-price advertising. When using this pricing practice, it is important to ensure that any comparison drawn is genuine and accurately reflects the previous price with the discounted price.

When making discount price representations:

  • The “was” price needs to be the price at which the professional service was offered for sale in a sufficient number and for a reasonable period of time before being discounted. The practitioner needs to be able to substantiate the discount offer.
  • Any previous price should be genuine and not inflated, so the discount is real.
  • A discounted price or special offer should be available for a limited period only.
  • A discount that is offered for lengthy period of time effectively becomes the new price, so continuing to use two-price advertising will not reflect a genuine discount to clients.
  • If discount pricing is used on the basis of how much something is “worth”, this needs to be supported by objective evidence.

COMPONENT PRICING
Component pricing is advertising a price for a good or service in multiple (component) parts. The rules on component pricing require that where a partial price representation is made the client, a prominent single (total) price must also be provided. For example, “buy 10 and get one free”. In this case you can’t just give the group price without giving the unit price to substantiate how much the purchaser will actually save. The total price needs to be the minimum amount required for a consumer to obtain the good or service as it is advertised, to the extent it can be calculated at the time the price presentation is made. A number of exceptions apply, including quotes provided directly to another business and contracts for the provision of services via a periodic payment scheme and term.

When using component pricing:

  • The single price needs to include all the components that are able to be quantified when the price representation is made.
  • A practitioner should be able to substantiate why they are not able to quantify a particular component if it is not included.
  • The total price should be stated as it is able to be calculated. When some components vary, they should be calculated on information available at that time, with clients clearly advised.
  • Section 53C of the TPA does not just apply to representations made in advertisements; it is also applies to the prices shown on consent forms or provided in verbal representation to clients.

For further information on dealing with consumers you should check the ACCC website as there are a number of publications available on advertising and selling. You can locate them on www.accc.gov.au or by contacting the ACCC information centre on 1300 302 502.

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