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Australian insurer's advertising misled customers

BIScom Subsection: 
Editorial Staff

The fine might seem small at only AUD43,200 but insurance is all about trust and when car insurer RAA Insurance was investigated by ASIC, it was found to have misled customers in its advertising. Oddly, the case can be illustrated by reference to cricket and the Australian Grand Prix, both within the past few days.

There were four adverts played on TV in South Australia between December 2016 and June 2017. The adverts appeared, according to ASIC, to imply that the insurance company would replace a car that was subject to total loss with a new car. However, there were "important conditions" that would have to be satisfied before that happened.

The conditions were almost as ridiculous as the marketing of cars by some manufacturers with "ten years warranty" when the microscopic print says that that is offered only to a customer who buys the car brand new - and so even dealer demonstrators or manufacturer-registered cars are outside the scheme. In this case, the conditions were that the car had to have been manufactured "after 2014" and insured by RAA, and only RAA, since it was new. Again, then, dealers' demonstrators and manufacturer's pre-registered cars, even if bought with single digit KM on the clock were not new in the hands of the purchaser and, therefore the RAA scheme would not apply.

ASIC was particularly concerned because the TV ad carried the disclaimer at the end of the advert, in "fine print" and was displayed for "a short period of time." Moreover "there was distracting audio-visual content in the advertisement while the disclaimer was displayed."

Having said that, there must be some sympathy with RAA. No one wants to see TV ads that are so full of disclaimers that the purpose of the advert is buried, in the way that so often happens in American advertising. And the complaint, while having merit, does go against the basic (if flawed principle) that advertising can be "mere puff," as it was described in the Carbolic Smoke Ball case more than 100 years ago.

Also, the advert is only inviting people to make contact: it's not as if the sale is made off the page. The problem is that consumers are always in a hurry, or lazy, or stupid and they suspend cynicism when it should be heightened. If information comes through some form of media, there is a tendency to say "someone's checked this for accuracy." In truth, that is rarely the case or, if they did, their boss told them to forget it.

That leaves the question, was there cause to think that RAA cannot be trusted? This newspaper says not: the company did everything it was supposed to do but didn't do it for long enough or in a sufficiently obvious way. To cross-refer to an entirely unrelated field - the circumstances can be directly compared to those that left Daniel Ricciardo with a three place grid penalty because he did everything required but didn't do it sufficiently obviously. It's a million miles away from tampering with the ball and then lying about it.