Trading Post found to have misled consumers using Google sponsored links

The Australian Federal Court has found that Trading Post Australia Pty Ltd engaged in misleading or deceptive conduct by publishing an advertisement on Google that linked searches for the words ‘Kloster Ford‘ to Trading Post’s website.

One of Google’s advertising services is ‘sponsored link’, which advertises a link to a paying customer’s website in response to particular word searches. Trading Post paid Google for a sponsored link to its website for the words ‘Kloster Ford’. Kloster Ford is a car dealership in Newcastle that competes with Trading Post for car sales and had not engaged Trading Post to conduct advertising on its behalf.

The Federal Court said that the Kloster Ford advertisement falsely represented that Trading Post was associated or affiliated with Kloster Ford and that Trading Post’s website contained information regarding Kloster Ford. Accordingly, Trading Post contravened sections 52 and 53 of the Trade Practices Act (now of course replaced by the Consumer and Consumer Act).

However, the Federal Court did not agree with allegations by the ACCC that Google, by displaying and hosting the advertisement, engaged in practices likely to mislead consumers. The ACCC had argued that by failing to adequately distinguish advertisements from search results, Google had engaged in misleading or deceptive conduct. The Court found that Google had not engaged in misleading or deceptive conduct as it had merely communicated the representations made by Trading Post without adopting or endorsing those representations.

The ACCC has now appealed the matter.

Irrespective of the outcome of the appeal, the decision is a reminder to business that the rules that apply to print advertising continue to apply to advertising online.