Customers ordering through Lily's Florist were made to believe it was a local business in more than 1000 Australian suburbs, but the online company outsourced to third-party florists to fulfil its orders.
It used more than 1500 different webpages and Google ads to mislead customers, the Australian Competition and Consumer Commission said.
United Florists Pty Ltd, which operates Lily's Florist, has given a court-enforceable undertaking to the watchdog to have its directors complete compliance training.
Elysium Marketing Pty Ltd, which is the trustee for the owner of the Lily's Florist business name and website, has made the same undertaking.
They both admitted Lily's Florist made misleading representations to customers.
The online florist marketed itself as "your local flower delivery service".
"Statements that mislead consumers into thinking they're dealing with a small business in a local area unfairly diverts business away from legitimate local businesses," watchdog commissioner Liza Carver said.
"Businesses seeking to boost their online presence by targeting particular locations in their marketing strategy must be transparent about how their business operates and where they are actually located."
Another company, Fig & Bloom Pty Ltd, has taken down potentially misleading representations from 940 webpages that could have made customers believe it was a local business in a specific suburb.
The company had its flowers assembled and delivered from one of three warehouses, which were often a fair distance from the suburb, the watchdog said.
"Consumers may seek out local providers in the hope of receiving fresher flowers or to support businesses in their neighbourhood," Ms Carver said.
"Misleading representations about the nature of a florist deprives consumers of the ability to make informed choices about their orders."
Fig & Bloom is a family-run business and it has always been transparent about its physical location, its co-director Dan Groch said.
The watchdog's investigation found that suburb delivery landing pages on its website contained potentially misleading statements, which were factually incorrect and inconsistent with its advertised address, he said.
While Mr Groch couldn't comment on how or why the watchdog reached its decision, he said the company participated "earnestly and actively" in the investigation.
It has since amended its suburb landing pages to specify where Fig & Bloom is located.
"We moved swiftly to remedy the potentially misleading communications and took additional steps to improve communications of our studio location," Mr Groch said.
Lily's Florist cooperated with the watchdog's investigation and has removed misleading statements from its webpages.
Lily's Florist has been contacted for comment.
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