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Learn From Coles: False Or Misleading Claims Are I...

Learn From Coles: False Or Misleading Claims Are Illegal

As the baking industry is all too aware, there has been recent action emphasising the importance of accuracy in advertising when businesses promote products or services.

A West Australian company entered into a court enforceable undertaking with Consumer Protection agreeing to remove unsubstantiated health benefit claims about its product GreenteaHawaii from the website www.gthaustralia.com.au, packaging and any advertising or promotional material.

The statements, which were to be removed, included:

• greenteaHawaii contains the antioxidant value of up to 45 cups of normal green tea;

• each sachet has only 10 calories and caffeine equal to half a can of diet coke; and

• this product is unique with a supercharge of antioxidants to fight the free radicals.

As part of the undertaking the company also agreed to offer a full refund to any customer, with proof of purchase between January 1, 2012, and July 25, 2014, who relied on the statements when purchasing the product.

The undertaking can be viewed at www.commerce.wa.gov.au/undertakings.

Consumers have a legal right to expect any claims being made by the promoter of a particular product are accurate and can be proven.

Under the Australian Consumer Law (ACL), regulators can issue substantiation notices to any business that makes claims in the marketing of their product. The onus is on the business to have credible and reliable information to reasonably support their claims.

Particularly in the area of health and weight loss products, businesses need to ensure claims about their product have a scientific basis and are supported by proven facts.

A statement may sound attractive to consumers, but it also needs to be backed up by evidence, otherwise the promoter may be breaching the false and misleading provisions of the ACL.

In addition to our work in WA, there has been national action of note. The Australian Federal Court imposed a three-year ban that prevents supermarket Coles from advertising its bread as being made or baked on the day it was sold.

An earlier hearing ruled Coles had breached the Australian Consumer Law (ACL) by labelling its bread as “fresh”, claiming its par-baked bread was “baked today, sold today” and “freshly baked in-store”, when it was actually partially baked and frozen off-site (in some cases overseas) before being transported to and finished off in stores.

The Australian Competition and Consumer Commission (ACCC) successfully argued labelling was likely to mislead consumers into thinking the bread was prepared from scratch in Coles’ in-house bakeries on the day it was offered for sale.

In a separate case, the Federal Court ordered New South Wales egg producer Pirovic to pay a $300,000 penalty after finding “free range” egg claims to be misleading. From January 2012 until January 2014, Pirovic used egg cartons, which included the words “free range” and images of hens in open pasture.

The Court found, and Pirovic admitted, most of its hens did not move about freely on an open range on most days.

Businesses must not mislead consumers in regard to the standard, quality, value or grade of goods or services, nor can businesses make false claims about price, age, benefits, or any associated guarantee or warranty.

Any statement representing products or services should be true, accurate and able to be proved. It does not matter whether a false or misleading statement was intentional or not.

Importantly, businesses cannot rely on small print and disclaimers as an excuse for a misleading overall message.

The maximum fines for businesses that mislead consumers are $220,000 for an individual and $1.1 million for a body corporate. Premium (or credence) claims that give the impression that a product, or one of its attributes, has some kind of added benefit when compared to similar products and services can be made as long as the claims are not misleading and can be substantiated.

Remember the golden rule in promoting or advertising any product or service: “Is what I am saying the truth?” If it is, and you can prove it, you are on a winning sales pitch.

Further information on truth in advertising can be found on the Consumer Protection website www.commerce.wa.gov.au/consumerprotection or the national websites www.accc.gov.au or www.consumerlaw.gov.au.


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