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Inside Fair Trading: Into the realm of fantasy

By Rod Stowe - NSW Fair Trading Commissioner

  Advertising is an integral component of selling a property, but agents need to be careful that they don’t step into the land of fairytales.

It would be fair to say that some agents sometimes walk a fine line between exuberance and exaggeration when it comes to advertising.

While I would love to report that complaints of misleading advertising against real estate agents in NSW are declining, this unfortunately is not  the case.

 
In the last financial year, NSW Fair Trading fielded more than 500 complaints and queries over alleged deceptive or misleading claims made by agents in property advertisements.

Common complaints

Many complaints involved the vexed issue of underquoting, but there is a long list of other gripes house-hunting consumers have brought to us in the past 12 months.

Agents are reminded that under section 51 of the Property, Stock and Business Agents Act 2002 a licensee is prohibited from publishing any statement that is materially false, misleading or deceptive. Even if you are not aware that a claim made in an advertisement you have authorised is false or misleading, you will still be held responsible and could face a fine of up to $22,000 under the Act.

Legislation

Under section 30 of the Australian Consumer Law, which deals specifically with misleading and false claims involving land sales, the fine can be as high as $220,000 for an individual or $1.1 million for a company.

These laws apply equally to visual as well as written communication. One of the most common complaints we receive involves the issue of ocean views, be they digitally enhanced or totally fabricated.

Displaying a view that cannot be seen from within the boundaries of a property is not acceptable, nor is using magnification to make a selling point such as an ocean view appear closer.

Any images capturing facilities or features that cannot be seen from the property, but are in close proximity, must be clearly marked ‘location shot’.

Fantasy photoshopping

Some agents are fond of photoshopping existing features to enhance a home’s ambience. It is all very well adding a digitally created warm glow to that ornate Victorian fireplace, for example, but if the chimney is long gone and it is not possible for a fire to ever burn in the grate, this amounts to misleading advertising.

Other common complaints, which if proven constitute false or misleading conduct, include: stating a property is located in a more desirable neighbouring suburb, inflating the size of the land or exaggerating the rate of rent an investor can expect the property to earn.

The Australian Competition and Consumer Commission (ACCC) shares Fair Trading’s concerns when it comes to false representations made in the property market.

Prosecutions

Last year, the ACCC successfully prosecuted one of the country’s largest residential builders in the Federal Court. Metricon was fined $800,000 for advertising features in its homes that it did not supply and for making misleading savings claims.

So make sure your enthusiasm doesn’t turn into porkies.

If what you have written or depicted could possibly confuse a reasonable or ordinary member of your target audience – that is, prospective buyers – then chances are the advertisement is misleading.


This article was first published in the October 2013 edition of the REINSW Real Estate Journal.