Misleading and Deceptive Conduct vs Defamation: What the BPS Financial Judgment Teaches Australian Businesses

The Federal Court’s January 2026 judgment ([2026] FCA 18) against BPS Financial Pty Ltd, ordering $14 million in penalties for misleading and deceptive conduct, provides Australian corporate lawyers with a textbook example of why the distinction between misleading and deceptive conduct vs defamation matters profoundly for commercial reputation disputes. Justice Kylie Downes’ findings against the Qoin cryptocurrency operator reveal the strategic calculus that sophisticated litigants must undertake when selecting their cause of action.

For corporations and their directors facing reputational attacks, the BPS case illuminates a path that many overlook: the Australian Consumer Law offers remedies that defamation law cannot.

Why Corporations Cannot Sue for Defamation Under Australian Law

Section 9 of the uniform Defamation Act 2005 excludes corporations with 10 or more employees from bringing defamation proceedings. This legislative choice, implemented across all Australian jurisdictions, reflects a policy decision that large corporations should not use defamation law to silence criticism.

The practical effect is stark. A company like BPS Financial, which issued more than 96,000 Qoin wallets and generated over $40 million in revenue, would be entirely barred from defamation proceedings regardless of how damaging any false statements might be. The same applies to ASX-listed entities, major private companies, and any business exceeding the employee threshold.

This exclusion creates a gap in legal protection that commercial defamation vs other causes of action analysis must address. The gap is not accidental. Parliament intended that corporations should rely on alternative causes of action, including those under the Australian Consumer Law and common law torts.

The Misleading Conduct Framework Applied in BPS

ASIC’s case against BPS rested on section 12DA of the Australian Securities and Investments Commission Act 2001, which prohibits misleading or deceptive conduct in relation to financial services. The equivalent provision for general trade or commerce appears in section 18 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010).

Justice Downes found BPS made three categories of false or misleading representations:

• Claims that Qoin could be exchanged for Australian dollars or other cryptocurrencies on an independent exchange
• Representations that Qoin could be used to purchase goods or services from a growing number of businesses
• Assertions about the trading functionality and value proposition that did not match reality

The court’s analysis demonstrates how misleading or deceptive conduct claims operate differently from defamation. There is no requirement to prove the defendant intended to deceive. The test is objective: would the conduct, in all the circumstances, be likely to mislead or deceive?

The Evidentiary Burden Compared

In defamation, a plaintiff must prove publication, identification, and defamatory meaning. The defendant then bears the burden of proving any defence, including truth, honest opinion, or qualified privilege.

Misleading conduct claims reverse much of this burden. The plaintiff establishes the conduct and its misleading character. The defendant cannot rely on truth as a complete defence in the same way. Instead, the focus remains on the overall impression created and whether reasonable persons in the target audience would be misled.

The BPS judgment shows this distinction operating in practice. Justice Downes examined what BPS communicated to its 80,000 affected customers and businesses, not whether BPS believed its statements were true. The company’s internal understanding was largely irrelevant to liability.

Strategic Advantages of Misleading Conduct Claims

The BPS case demonstrates several advantages that misleading conduct claims offer over defamation for corporate plaintiffs:

No corporate exclusion. Unlike defamation, the Australian Consumer Law applies equally to corporations of any size. A company with 10,000 employees can pursue misleading conduct claims with the same standing as a sole trader.

Broader remedies. The Federal Court ordered BPS to pay $14 million in pecuniary penalties, prohibited it from providing unlicensed financial services for 10 years, and required corrective advertising. Defamation damages rarely approach this scale, and corrective advertising orders are uncommon in defamation proceedings.

Injunctive relief more readily available. Courts grant injunctions in misleading conduct cases more freely than in defamation, where the common law’s traditional reluctance to restrain publication remains influential.

Regulatory support. ASIC and the ACCC can bring proceedings on behalf of affected parties. No equivalent regulatory enforcement exists for defamation.

When Defamation Remains the Appropriate Cause of Action

The analysis of commercial defamation vs other causes of action should not suggest that defamation has no role. For individuals, including company directors and executives, defamation remains available and often preferable.

BPS director Tony Wiese, for example, could personally bring defamation proceedings if false statements were made about him individually, even though BPS itself could not. The academic literature on defamation law confirms that this individual/corporate distinction creates strategic opportunities for sophisticated litigants.

Directors facing reputational attacks should consider whether the defamatory material concerns them personally or the company. Material suggesting a director acted fraudulently or dishonestly may support an individual defamation claim even where the company cannot sue.

The Injurious Falsehood Alternative

Between defamation and misleading conduct sits injurious falsehood (also called malicious falsehood). This tort requires proof that:

• The defendant published false statements about the plaintiff’s goods, services, or business
• The statements were published maliciously
• The plaintiff suffered actual damage

The malice requirement makes injurious falsehood harder to establish than misleading conduct. But it applies to corporations of any size and can address competitive attacks that might not constitute misleading conduct in trade or commerce.

In the BPS context, competitors or critics making false statements about a company’s financial products might face injurious falsehood claims where the corporate plaintiff can prove malice and quantifiable loss.

Practical Implications of the $14 Million Penalty

ASIC sought substantial penalties against BPS. The court ordered $14 million after considering BPS’s financial position and evidence regarding its capacity to pay. Justice Downes described the conduct as “condemnable” and “serious and unlawful.”

This penalty quantum signals the Federal Court’s willingness to impose substantial consequences for misleading conduct affecting large numbers of consumers. For corporations considering whether to pursue misleading conduct claims against competitors or critics, the BPS judgment confirms that courts will order meaningful remedies.

The ten-year prohibition on BPS providing unlicensed financial services adds a prospective dimension that defamation judgments typically lack. Defamation damages compensate for past harm. Misleading conduct orders can prevent future harm through prohibitions and corrective measures.

Selecting the Right Cause of Action

The BPS judgment teaches that cause of action selection requires careful analysis of:

The plaintiff’s identity. Corporations exceeding 10 employees cannot sue in defamation. They must look to misleading conduct, injurious falsehood, or interference with business relations.

The nature of the false statements. Statements about commercial dealings, product quality, or business practices fit naturally within misleading conduct. Statements about personal character or integrity may suit defamation (for individuals) or injurious falsehood.

The available evidence. Misleading conduct requires proof of the conduct and its misleading character. Injurious falsehood requires proof of malice. Defamation shifts significant burdens to the defendant. The available evidence should drive strategy.

The desired remedies. If corrective advertising or injunctive relief matters more than damages, misleading conduct offers advantages. If vindication of personal reputation is paramount, defamation may be preferable for eligible plaintiffs.

Understanding director liability in these contexts is equally important, as personal exposure often shapes litigation strategy.

The Regulatory Dimension

ASIC’s enforcement action against BPS highlights a feature unavailable in defamation: regulatory prosecution. When misleading conduct affects consumers or investors at scale, regulators may pursue proceedings that individual plaintiffs could not afford or sustain.

The 80,000 affected Qoin users and businesses could not have individually pursued claims approaching the $14 million penalty obtained by ASIC. Regulatory enforcement aggregates harm and achieves deterrence that private litigation cannot match.

For corporations facing misleading attacks from competitors, engaging with regulators may prove more effective than private litigation. A complaint to the ACCC about a competitor’s misleading advertising can trigger investigation and enforcement without the complainant bearing litigation costs.

Looking Forward

The BPS Financial judgment will likely be cited in future misleading conduct cases involving cryptocurrency, financial services, and consumer protection. Its analysis of representation, reliance, and remedy provides a template for practitioners advising corporate clients on reputation protection strategies.

The $14 million penalty, combined with the ten-year prohibition and corrective advertising orders, demonstrates that misleading conduct claims can achieve outcomes that defamation law denies to corporate plaintiffs. For businesses facing reputational attacks, the question is no longer whether defamation applies but which alternative cause of action offers the strongest path to vindication.

Australian corporate law provides multiple tools for reputation protection. The skill lies in selecting the right one.