Australia: Is it a bird…Is it a plane…no, its the ACCC – protecting consumers from false and misleading claims in advertising

Much like the characters in a Marvel or DC comic book, the role of the Australian Competition and Consumer Commission (ACCC) is to protect the community. Specifically, the ACCC protects consumers, in addition to strengthening and supplementing the way competition works in Australian markets and industries.

The ACCC has the power to initiate proceedings and will take action against an individual or a company where it believes that the result will improve consumer welfare, protect competition or stop conduct that is anti-competitive or harmful to consumers and therefore promote the proper functioning of Australian market.

In the last 12 months, the ACCC has initiated proceedings against a number of well-known Australian and international businesses in relation to claims made in advertisements and the promotion of the goods and services offered by these companies.

This blog examines the decisions of some of these cases as well as some actions that have recently been initiated by the ACCC.

In December 2018, the ACCC initiated proceeds against American multinational personal care corporation, Kimberly-Clark, in the Federal Court of Australia alleging that in describing its Cottonelle® wipes product as "flushable" on product packaging and its website, Kimberly-Clark had misled consumers about the suitability of its wipes to be flushed down the toilet.

During the proceedings, the ACCC argued that Kimberly-Clark wipes did not break apart quickly once flushed and therefore should not have been considered "flushable." However, the Court found that Kimberly-Clark claims were not false or misleading. The Court ruled there was insufficient evidence to show that the wipes had contributed to blockages in sewage systems, known as "fatbergs."

In a statement made by ACCC Chair Rod Sims, Mr Sims noted that the ACCC took this action because it was concerned that consumers would be misled about the very nature of the products they were buying. The ACCC also took on this case because they were aware of increasing problems reported by Australian water authorities as a result of unsuitable products being flushed down the toilet, contributing to blockages and other operational issues.

On 29 July, 2019, the ACCC announced that it was appealing the Federal Court's decision. The ACCC will argue on appeal that the claims made by Kimberly-Clark that the Kleenex branded wipes were "flushable" should have been found to be misleading because there was evidence of the risk of harm these wipes posed to the sewerage system, and that the trial judge was wrong to require evidence that these particular wipes had caused actual harm. A hearing for the appeal before the Full Federal Court will be set at a later date.

In May 2019, the Federal Court of Australia ordered Jetstar Airways Pty Ltd to pay $1.95 million in penalties for making false or misleading representations about consumer guarantee rights under Australian Consumer Law (ACL). The action commenced by the ACCC against Jetstar was part of the ACCC's effort to tackle consumer issues in the airline industry.

The Court found that between April 2017 and March 2018, Jetstar had made false or misleading representations on its website about the rights and remedies available to consumers under the ACL. Jetstar had made statements on its website that some fares were not refundable and that consumers could only get a refund if they purchased a more expensive fare. The Court also found that Jetstar's terms and conditions breached the ACL by claiming that consumer guarantee rights under the ACL did not apply to Jetstar flight services, and that Jetstar's obligation to provide refunds or replacement flight was limited.

The Court found the representations to be false or misleading because all flights regardless of their price attracted automatic consumer guarantees and airlines are unable to "opt-out" and set their own terms and conditions, no matter how cheap the fare is. All consumers have a right to a remedy, such as a refund, if services are not supplied within a reasonable time.

The ACCC has also recently initiated proceedings in the Federal Court against the following companies:

  • Samsung Electronics Australia Pty Ltd - alleging it made false, misleading and deceptive representations in advertising the "water resistance" of various GALAXY® branded mobile phones;

  • Kogan Australia Pty Ltd - alleging that Kogan made false and misleading representations about a 10% discount promotion in relation to an online promotion where consumers could obtain a 10% discount on most of its products by using a discount code. The ACCC allege that Kogan's advertisements were false and misleading because Kogan increased the prices of more than 600 of its items immediately before the promotion. In most cases prices were increased by at least 10%; and,

  • Sony Interactive Entertainment Network Europe Limited (Sony Europe) - for making false or misleading representations to Australian consumers on its website and in dealings with Australian customers of its PlayStation online store about their rights in relation to the goods being sold.

These instances all serve as a reminder that businesses cannot make blanket "no refund" statements about goods or services and that care must be taken when making claims about a characteristic or function of a product or service. If you're not careful, be warned the ACCC may be watching you and 'KAPOW!' you may find yourself before the Federal Court of Australia.

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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