In two recent cases, the Australian Competition and Consumer Commission (ACCC) has made it very clear that misleading product descriptions will result in fines and orders for remedial action.
Under the Australian Consumer Law (ACL), a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. A person is also prohibited from making false or misleading representations relating to the standard or quality of goods, the place or origin of goods or the manufacturing process, characteristics or suitability for purpose of goods.
Universal Pharmaceuticals Pty Ltd (“UP”) was obliged to enter into a court-enforceable undertaking to remove two product claims from its “Wealthy Health” website relating to its product, “Wealthy Health Organic Squalene 1000 mg with Vitamin E”. The relevant claims were that the product ingredients were:
- “sustainably sourced from sharks from the crystal clear oceans of Australia”; and
- “obtained from the clear oceans surrounding Australia”.
These claims infringed the ACL, as UP knew from approximately 2019 that the squalene contained in the product was not exclusively sourced from Australian waters. The undertaking entered into by UP included an obligation to apologise and offer refunds to customers who purchased the product between February 2021 and 21 October 2022.
Similarly, the ACCC issued HBC Trading Australia Pty Ltd (“HBC”) with two infringement notices for allegedly making false or misleading representations on the product label of it’s “Chef’s Choice Vanilla” product. The product label included a statement that the product was “alcohol-free pure vanilla extract”.
The Chef’s Choice product used the word “pure”, despite the product containing ingredients not derived from vanilla beans, including “vanillin flavouring derived from clove oil, as well as glycerine and xanthan gum”. In a media release, ACCC Deputy Chair Delia Rickard said, “We are concerned that bakers who intended to buy ‘pure’ vanilla to make their cakes and slices could have been misled into buying extract that included additional flavour from a non-vanilla bean source… Consumers rely on the accuracy of claims made on food product labels, and businesses must ensure their labelling is truthful and not likely to mislead consumers.”
HBC has paid penalties of $26,640 under the infringement notices which were issued by the ACCC.
Clearly, in light of these two matters, it is essential that suppliers of products ensure that no false or misleading assertions are made in product advertisements, including the use of words such as “pure” or “organic”, unless such claims can be substantiated.
If you have any questions in relation to the ACL requirements relating to false or misleading representation, require training for your team in relation to the Australian ConsumerLaws, or you are unsure if your product complies with these requirements, please contact our Intellectual Property or Litigation + Dispute Resolution team.
Written by Ben Gouldson with assistance from Patrick Gellatly.
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