E-cigarette retailers, Social-Lites Pty Ltd (Social-Lites) and
Elusion New Zealand Limited (Elusion), health insurer Medibank and
H.J. Heinz Company Australia Ltd (Heinz) are some of the latest
culprits under investigation by the Australian Competition and
Consumer Commission (ACCC) for misleading and/or deceptive
representations to consumers.
The Competition and Consumer Act strictly prohibits business
conduct that is likely to, or will mislead or deceive consumers.
This conduct can include advertisements and statements that are
false, inaccurate or unable to be substantiated that are made
Product packaging (read our blog on how Nurofen experienced a
headache in this area)
A person representing the business.
The ACCC closely monitors and investigates the conduct of
businesses with respect to claims about a product's quality,
value, price, age, associated benefits or related guarantees or
warranties. When assessing potential contraventions, the ACCC
considers the overall impression of a business's representation
or statement and whether it is likely to mislead or deceive.
The following case studies serve as examples of how businesses
may engage in conduct that can be perceived as misleading and/or
deceptive, and in doing so, contravene Australian Consumer Law.
E-cigarette retailers under fire
Two online e-cigarette retailers, Social-Lites and Elusion, are
in the midst of proceedings brought to the Federal Court by the
ACCC, under suspicion of making representations that their
respective products are absent of toxic chemicals typically found
in conventional cigarettes.
Following independent testing conducted by the ACCC, the
companies' products were found to contain carcinogens such as
formaldehyde, rendering the statements on their respective websites
false. Consequently, the ACCC is seeking various penalties from the
Supreme Court. ACCC Chairman, Rod Sims, stressed that prior to
making such representations or statements, suppliers should have
scientific evidence to support their claims.
Health care provider receives negative results
Health care provider Medibank Private Limited has also found
themselves on the radar with the ACCC alleging that Medibank's
subsidiary, ahm, intentionally concealed its decision to limit
in-hospital and radiology benefits. The ACCC also alleged the
following unconscionable conducts to have occurred on behalf of
Medibank knowing or expecting members to believe that all
in-hospital medical expenses were covered
Medibank acknowledging there was a risk members might leave if
they became aware that certain costs were not covered
Medibank acknowledging there was a risk their brand and
reputation may be damaged if the general public discovered certain
costs were not covered
Medibank estimating that a reduction in covered costs would
lead to financial gains (both of the treatment and from retaining
Mr Sims stressed that health fund members could reasonably
expect to be notified in advance when substantial changes to their
benefits were imminent. He noted that competition and consumer
complaints in the health industry were a priority of the ACCC as
the conduct of health insurers is likely to affect vulnerable
Sugar leaves a bad taste for nutritious food supplier
Finally, Heinz has been accused of engaging in conduct that is
likely to mislead the public due to various misrepresentations on
the packaging of its 'Little Kids Shredz' products.
Labelled with statements such as "99% fruit and veg" and
"Our range of snacks and meals encourages your toddler to
independently discover the delicious taste of nutritious
food,"a close read of the nutritional statements reveals that
the products are in fact 68.7% sugar.
According to Mr Sims, the Heinz 'Little Kids Shredz' are
likely to hinder a child's acceptance of fresh produce due to
the extreme difference in taste and consequently, "encourage a
child to become accustomed to, and develop a preference for, sweet
Before making any representations around your product, contact
our Commercial Advice team to make sure what you want to say
won't be considered misleading or deceptive conduct:
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Businesses should ensure that any promotions do not cross a 'fine line' between acceptable and misleading or deceptive.
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