Westpac rapped over “stress free” claims on margin loans – five advertising terms to be careful with

As the global financial crisis showed, margins loans can be stressful thing.

So when the corporate regulator saw that Westpac Banking Group had described products such as margin loans, exchange traded funds and self-funding instalments as “stress-free”, it saw red and the bank had to back down.

Australian Securities and Investments Commission commissioner Peter Kell said yesterday that the term stress-free is “quite a powerful claim.”

“And in the context of not wanting to create unrealistic expectations that can lead to poor investment decisions, ASIC considered the use of the phrase to be inappropriate, particularly in a volatile market environment.”

ASIC says it encourages the financial services industry to “strive to do more than simply meet the minimum requirement of not being misleading or deceptive”.

Now that Westpac has agreed to dump the expression from its advertising, we wondered: what phrases should companies think twice before using?

The Australian Competition and Consumer Commission says to avoid falling under the “misleading and deceiving” umbrella, companies need to ensure they can substantiate their claims.

It says the following claims have fallen under the radar over the years:

• Country of origin claims, such as Ugg Boots’ claims that their product was made in Australia when in fact it was made in China.
• Region of origin – if you make a claim that product is from a specific region, such as King Island, it must be so.
• Companies that have advertised products nationally which are only available in some parts of the country.
• The speed and pricing of broadband plans.
• Caps on mobile phones.

Here are some more terms that it is worth being very, very careful about using:

• Stress-free

“Stress-free” suggests the simplification of complex things. What might be simple for an industry insider is not necessarily simple for the average Joe, and the expression may discourage consumers from doing proper due diligence.

• Green

There’s a name for this: green-washing. If you’re going to spout the environmental credentials of your product, make sure you can back it up.

• Unlimited

A reasonable person would take that expression at face value, and internet service provider TPG is one group to have landed in hot water for advertising that its “unlimited cap saver” plan included unlimited calls and text for $59.99 per month, when in fact there are multiple exclusions to the plan.

The Frying Dutchman is another company which landed in legal hot water for its claims. Famous litigant Homer Simpson sued the seafood restaurant, which had promised “all you can eat”, for kicking him out after serving him dozens of plates of food. Okay, that was on a fictional cartoon, but the lesson still stands.

• Guaranteed

If you say guaranteed, be prepared to show evidence and follow up on consumer complaints.

• Cheapest

Prices change so often, so it’s a promise that might be both difficult and expensive to meet.