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Lorna Janes’ anti-virus
marketing hype backfires badly
Lorna Jane hyped up a simple fabric protecting spray as a
shield against deadly viruses in a recent marketing campaign
- without having any science-based evidence to back up the
hype.
It was inevitable that Lorna Jane felt the full force of the
law from the medical devices regulator and the Australian
Consumer Law regulator for making this claim, as this
article describes.
What did Lorna Jane do?
Lorna Jane sells activewear, such as gym clothes, tights,
leggings and sports bras, sold in retail stores and online.
Activewear is casual, comfortable clothing suitable for
sport or exercise.
On 2 July 2020, Lorna Jane commenced a marketing campaign to
promote its “LJ Shield Activewear” range, which were
activewear products treated with a protective spray. The
campaign commenced shortly after the COVID-19 pandemic
became a public health emergency.
Lorna Jane tapped into the COVID-19 hysteria by hyping the
anti-bacterial benefits of its products treated with the
protective spray. Instead of making a low-key claim such as
the spray protects against germs, Lorna Jane hyped it up and
claimed that the spray completely eliminated any deadly
virus. These were the claims:
- Lorna Jane Shield, a bacteria and virus-killing non-toxic
mist that permanently adheres to our fabrics to give you activewear that stops harmful pathogens in their tracks …
completely eliminating the possibility of spreading any
deadly virus.
- LJ Shield Activewear protects wearers against lethal
viruses, including COVID-19.
- LJSHIELD is a groundbreaking technology that makes
transferal of all pathogens to your Activewear (and let’s
face it, the one we’re all thinking about is Covid-19)
impossible by eliminating the virus on contact with the
fabric.
- On its websites, it displayed this logo:
Had these claims been supported by reasonable scientific and
technical evidence, then well and good. But they were not.
There were no scientific tests to support the claims.
The marketing attracted the attention of the regulators, the
Therapeutic Goods Administration (TGA) and the Australian
Competition and Consumer Commission (ACCC).
The TGA acted quickly
– On 17 July 2020, the TGA issued
three infringement notices totalling $39,960 for alleged
unlawful advertising in relation to COVID-19.
Under the Therapeutic Goods Act 1989, any advertising
containing references to COVID-19 (and other serious forms
of disease) in the promotion of goods needs to have the
permission of the TGA. Permission is granted only after
scientific evidence has been accepted and the goods are
registered as therapeutic goods. For more, see my article
False claims of virus protection result in a fine for Lorna
Jane
Lorna Jane withdrew the marketing campaign six days later,
on 23 July 2020.
The ACCC instituted Federal
Court proceedings on 21 December
2020 for breaches of the Australian Consumer Law. For more,
see my article
ACCC takes Lorna Jane to court over
'Anti-virus Activewear' claims.
On 23 July 2021, the Federal Court of Australia made final
orders against Lorna Jane. The decision is Australian
Competition and Consumer Commission v Lorna Jane Pty Ltd [2021] FCA 852 (Rangiah, J)
The Court said: “The marketing campaign was conducted in
July 2020 in the midst of the COVID-19 pandemic. The
campaign was conducted through Instagram stories, media
releases, advertising on Lorna Jane’s website, direct
emailing of customers, and in-store advertising.”
The Court examined 4 categories of false claims
(misrepresentations) made by Lorna Jane in the marketing
campaign:
- Viruses, including COVID-19, would be unable to adhere or
transfer to or would otherwise be eliminated on contact with LJ Shield Activewear
- LJ Shield Activewear protected wearers against viruses,
including COVID-19
- Wearing LJ Shield Activewear would eliminate, render
impossible or otherwise stop the spread or transfer of
viruses, including in gyms and upon returning home from the
gym
- There was a reasonable scientific or technological basis
for these claims at the time they were made.
The claims were misleading or deceptive conduct under s 18
of the Australian Consumer Law (ACL), false or misleading
representations as to performance characteristics, uses and
benefits under s 29(1)(g) of the ACL and misleading conduct
as to the nature, characteristics and suitability for
purpose under s 33 of the ACL, because there was no
scientific evidence to support the claims.
In the ACCC Media Release ACCC Chair Mr Sims said: “This
type of conduct is particularly harmful where, as here,
consumers cannot easily check or monitor the claims made.”
The Court’s considerations in setting the penalty
The Court said:
“The most significant factors in the present case are the
nature and seriousness of the contraventions, the need for
deterrence of such conduct, and the admissions of the
contraventions and agreement to the orders by Lorna Jane.
The advertising campaign was conducted in July 2020 at a
time of considerable uncertainty, fear, and concern amongst
the public about the consequences and spread of COVID-19. At
that time, there had been at least 8,000 reported cases and
104 deaths in Australia. On 16 July 2020, there were 315 new
cases of COVID-19 reported in Australia.
Lorna Jane sought to exploit the fear and concern of the
public through the use of misleading, deceptive, and untrue
representations about the properties of LJ Shield Activewear.
The behaviour of Lorna Jane can only be described as
exploitative, predatory, and potentially dangerous.
Lorna Jane’s contraventions of ss 29(1)(g) and 33 of the ACL
must be regarded as very serious. There is a need to impose
a substantial penalty to reflect the seriousness of the
conduct and to demonstrate that exploitative conduct of this
kind will not pay.
It is appropriate to note, however, that the applicant [ACCC]
does not allege that Lorna Jane actually knew that the
representations it was making were false. It is also
relevant that Lorna Jane has not been shown to have actually
profited from its conduct, nor that the contraventions
actually caused harm to consumers.
It must be taken into account that the making of the
representations was directed by Ms [Lorna Jane] Clarkson [CEO
of Lorna Jane], so that the conduct emanated from a very
high managerial level within the company.
An appropriate allowance should be made for the fact that
Lorna Jane admitted the contraventions, although only a
short time prior to the commencement of the trial. It should
also be taken into account that Lorna Jane has agreed to the
orders proposed by the applicant.
Taking into account all the circumstances, I am satisfied
that the penalty of $5 million proposed by the parties is
appropriate.”
[paragraphs 17 to 23, judgment]
The Court made these orders:
- Lorna Jane pay a penalty of $5 million, payable as to $2
million within 30 days and then by 12 equal instalments of
$250,000 per month.
- Lorna Jane is not to use the words “anti-virus” in its
marketing materials for three years, including words such as
its “activewear eliminates viruses and pathogens, including
COVID-19” unless it has a reasonable basis for doing so.
- Lorna Jane is to place a corrective notice on the home
pages of its websites, email the notice to all consumers on
its electronic direct mailing list, place it on its Facebook
page and its Instagram page, and on an A4 poster in each
store.
- Lorna Jane is to establish an Australian Consumer Law
compliance program to operate for three years.
- Lorna Jane is to pay the ACCC’s legal costs in the
proceedings of $370,000 within 14 days.
Marketing Commentary by Michael Field from EvettField
Partners
Wake up and smell the penalties!
In a press release dated 23 August 2018, Australian
Competition and Consumer Commission (ACCC) Chair Rod Sims
warned:
“Companies will now face more serious financial consequences
for breaching consumer law that align with competition law
breaches. We have strongly advocated for higher maximum
penalties to enable courts to impose more substantial
penalties.
Penalties need to hit the bottom line, so they are not
simply seen as the cost of doing business (and) need to be
high enough to be noticed by boards and senior managers so
that compliance with the law is a higher priority. Increased
penalties will help to deter large companies from breaching
consumer laws”.
The ACCC has followed through with increased penalties as
evidenced by the recent $5 million penalty issued to Lorna
Jane for breaches of Australian Consumer Law (ACL). The
speed of the prosecution and the size of the penalty should
be ringing alarm bells in boardrooms across Australia.
What are the lessons, and how can businesses ensure
compliance with Australian Consumer Law (ACL)?
- Businesses can no longer afford to ‘sail close to the
wind’ with their marketing claims, or they risk being caught
by the regulators, and forced to pay a heavy penalty, in
financial and reputational terms
- Misconduct will not go unnoticed or unpunished.
- The ACCC has increased their monitoring and surveillance
to ensure businesses comply with Australian Consumer Law
(ACL), including working with other agencies and regulatory
bodies such as the Therapeutic Goods Administration (TGA)
- The ACCC has increased penalties to deter companies from
breaching Australian Consumer Law (ACL)
- You cannot simply hope that the penalties will be small,
and potentially so insignificant that they could be
considered a ‘cost of doing business’ or factored into the
overall marketing costs of a campaign
- This is no longer a marketing or brand issue, but rather
a compliance, governance and legal issue that demands the
attention of the board and their legal advisers
- Don’t just leave the marketing to the marketers –
management needs to pass it by a consumer law compliance
expert before approving the marketing
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