The Australian Competition and Consumer Commission (ACCC), Australia’s competition and consumer watchdog, has instituted proceedings against Airbnb, Inc. and Airbnb Ireland (Airbnb) in the Federal Court of Australia claiming that Airbnb falsely, and misleadingly, represented to Australian consumers about Australian accommodation prices. ACCC accusations is that Airbnb led consumers to believe that the prices were in Australian dollars (AUD), when in many cases they were
priced under the US dollar (USD).
What is Deceptive and Misleading Conduct?
Misleading or deceptive conduct is a legal concept enshrined under section 18 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Law 2010 (Cth)) (the Act). In its most basic definition, the misleading or deceptive provisions under the Act prohibits businesses, in trade or commerce, to engage in conduct that misleads or deceives, or is likely to mislead or deceive, consumers or other businesses.
For example, misleading or deceptive conduct can occur when a business makes claims or representations that are likely to create a false impression in consumers regarding the price, value or quality of goods or services on offer.
How the events transpired
The ACCC alleges that Airbnb guests had booked accommodation under misleading pricing between January 2018 and August 2021. Significantly, thousands of these customers booked the accommodation assuming that they were paying with AUD but
were ultimately paying in USD instead.
With an average conversion rate of 0.72 US cents to AUD over the last three years, Australians were paying a far higher price for accommodation than what was advertised. For instance, customers who booked a $500 rental paid $200 more than planned after being charged in USD. In some cases, the ACCC alleged that Airbnb clarified that the price was in USD in a small font, but only after the customer had reserved the accommodation.
A series of complaints to the ACCC ensued, resulting in the ACCC initiating proceedings against Airbnb to compensate the affected customers.
Misleading or deceptive conduct at a glance – Representations made to the public
In the context of advertising, the question is when will conduct that is directed to the public at large be considered as misleading or deceptive? Some of the following principles, established by Australian courts, may assist in answering that question:
- the relevant section of the public must be identified;
- the matter must be considered in reference to all people who come within that section of the public (i.e. demographic and socioeconomic status). However, the conduct must be tested against ordinary and reasonable members of a class;
- it is necessary to query why the misconception occurred through evidence by those who have been led into error, in order to determine whether they were confused by the misleading conduct; and
- the conduct that is claimed to mislead or deceive must be consider within the
context of its occurrence.
Of important note, no one actually needs to be misled in order for misleading or deceptive conduct to occur. The conduct just needs to be “likely” to mislead or deceive.
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By Hesh Aiyach
Hesh is part of Salerno Law’s corporate and commercial law team. He is a keen and avid lawyer with extensive business experience acquired during his time as a business owner. Since his time of admission into practice, he has been exposed to an array of matters in the corporate, banking, and finance sectors, assisting both small and large companies. He understands that small businesses need the best protection and that all businesses should be equipped to deal with regulatory changes as they arise. His commercial legal development and business experience offers clients the benefit of a lawyer who will look after their businesses as if it was his own.