13 Sep 2010

ACCC enforcement wrap-up

by Madeleine Kearney

Claims about environmental benefits, country of origin, consumers' rights under statutory warranties and product performance are particularly engaging the ACCC's attention.

We are already two-thirds through 2010 - how time flies!

The ACCC has certainly had a busy year so far, having conducted a wide range of product-related enforcement activity, including the following:

Misleading and deceptive conduct

  • Commenced legal proceedings against Goody Environment Pty Ltd and Nupack Australia Pty Ltd in relation to biodegradability claims made in relation to "Goody" plastic bags. Nupack has given an interim undertaking to the Court that it would cease making certain representations in relation to the product.

  • Commenced proceedings against Lift Shop Pty Ltd and its director, Leslie Katz, relating to the supply of lifts that were different to those which were ordered by two consumers. The proceedings were resolved by way of consent orders whereby the Federal Court declared that the Lift Shop and its director had engaged in misleading conduct in breach of the Trade Practices Act 1974.

  • Accepted court-enforceable undertakings from Wendy Wu Tours Pty Ltd for the breach of the "all inclusive pricing" provisions of the Trade Practices Act 1974. The matter related to two advertisements. The first advertisement included a price for each tour and then added "Fuel Levy & tipping additional. Currently $540 pp". The second advertisement gave a daily price for tours ranging from 10-29 days, with a fine print disclaimer that the rate applied to low season departures of the 28 day tour.

  • Commenced proceedings against two suppliers of consumables for franking machines and postage meters. The ACCC alleges that the two companies falsely represented: that they were an authorised representatives of Pitney Bowes Australia Ltd; that the ink cartridges they supplied were genuine Pitney Bowes cartridges, and that they contained fluorescent ink in accordance with Australia Post standards. The court declared that they had engaged in misleading conduct.

  • Accepted administrative undertakings from Nokia Australia Pty Ltd and Fone Care Pty Ltd (which operates Nokia Care Centres throughout Australia). The ACCC raised concerns with the service agreement that consumers were required to sign when making a warranty claim. In the ACCC's view the agreement attempted to restrict consumers' statutory warranty claims. The agreement had been authorised by Nokia. The ACCC also raised concerns with Fone Care's refund policy, which represented that there was a 14 day time limit on statutory warranty claims.

  • Investigated claims regarding an alleged anti-snoring ring. The supplier, ATQOL Pty Ltd. provided the ACCC with a Court enforceable undertaking to resolve the matter, which included an undertaking to withdraw the claims.

  • Accepted court-enforceable undertakings from H.J. Heinz Company Australia Limited after Heinz admitted that "Proudly Australian owned" claim made on Golden Circle products was misleading and deceptive. Golden Circle was acquired by Heinz in December 2008 but continued to sell Golden Circle products with the "Australian Owned" labels while transitioning to new labels. Heinz also donated more than 800,000 cans of Golden Circle fruit to charity.

  • Investigated a wholesaler of household goods, Mayvic Pty Ltd in relation to the promotion of "authentic" Aboriginal rock art magnets. Mayvic agreed to withdraw the magnets from sale.

  • Investigated an online retailer of computers, software and electronic goods for misleading statements made in its warranties and returns policies regarding consumers rights. Esel Pty Ltd, trading as Mwave (www.mwave.com.au), amended its site and agreed to consider some warranty claims.

  • Obtained interlocutory injunctions against Darryl Jones (principal of the Darryl Jones Health Resolution Centre) over alleged misleading conduct in connection with a cancer treatment program, including that taking "laetrile, also known as amygdalin or 'B17'" was effective to treat or prevent cancer.

  • Obtained a declaration in the Federal Court of Australia that Ozdirect Online Brands Pty Ltd and its director Paul Albright had engaged in misleading and deceptive conduct in relation to their online electronic goods retailing business. The Court made orders that Ozdirect accepted payment for goods it knew (or ought reasonably known) would not be able to supply within a reasonable time (including when it was on credit hold with its suppliers). The Court also held that Ozdirect made misleading statements regarding consumers' rights to obtain a refund.

  • Accepted court-enforceable undertakings from Austar Port Lincoln Pty Ltd trading as Austar Seafood Warehouse in relation to misleading claims regarding the place of origin of its seafood. Austar published advertisements representing that its products were "100% Port Lincoln Product" and "local seafood", however, some of the seafood was from other places in Australia or imported.

  • Commenced court Proceedings against Global Green Plan Ltd for breach of court-enforceable undertakings. Global Green Plan operated a GreenPower retailing business, which accepted payments from customers on the proviso that the money would be used to purchase renewable energy certificates. However, not all of this money was used to purchase these certificates as represented. Global Green Plan gave an undertaking that it would purchase approximately 4,000 renewable energy certificates and to write a letter to its customers explaining what it had done. The ACCC alleges that neither of these undertakings had been complied with.

  • Commenced court proceedings against Prime Carbon Pty Ltd which sells a "soil carbon and sequestration program" to farmers. The ACCC alleges that Prime Carbon made false or misleading representations about the National Environment Registry and the National Stock Exchange of Australia Limited regarding carbon credits.

Product Safety

  • Commenced criminal proceedings against Philip James Robinson in relation to the supply of infant sleeping bags that did not comply with the mandatory consumer product safety standard.

  • Conducted an investigation into the safety of infant slings and issued advice to consumers to be cautious when using these products. This investigation followed the recall of a particular brand of infant sling products by its supplier.

  • Accepted court-enforceable undertakings from an importer of bunk beds, Linksea Pty Limited, relating to the supply of bunk beds that did not comply with the mandatory consumer product safety standard. Linksea recalled the affected beds and agreed to modify its designs and monitor the quality of bunk beds it imports.

  • Accepted court-enforceable undertakings from Sony Trading Pty Ltd in relation to the supply of konjac jelly cups in contravention of a banning order. The supplier conducted a recall of the jelly cups.

  • Accepted court-enforceable undertakings from Apollo Bicycle Co Pty Ltd in relation to the supply of children's bicycles that did not comply with the mandatory product safety standard. Apollo withdrew the product from sale and published notices advising customers to contact them to arrange to have the missing safety components fitted.

  • Issued an alert in relation to decorative wall tiles that were found to contain tremolite asbestos.

What does this tell us about the ACCC's focus in enforcement?

A review of the above activity suggests that environment claims remain an area of enforcement priority for the ACCC, as are country of origin claims, claims regarding consumers' rights under statutory warranties and product performance claims. Further, the ACCCC actively enforces product safety issues, particularly compliance with mandatory product safety standards and banning orders, and regularly conducts random retail surveys of products subject to mandatory standards aimed at detecting non-compliant product.

The above underscores the importance to suppliers of consumer goods ensuring that all product claims can be substantiated, as well as having appropriate systems in place to ensure that products supplied comply with any relevant mandatory standards.

 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.