Cordato Partners, Business Lawyers, Property Lawyers, Tourism Lawyers
 
 

Marketing and Advertising Law

 

Can a secret spray keep Covid away?

Is there a cure for the Spread of COVID-19? Lorna Jane Thinks So!

This was the headline for an advertising campaign by Lorna Jane, who sells activewear.

And what is the cure? It is a secret spray applied to the fabric, which Lorna Jane called 'LJ Shield'.

In Lorna Jane's own words, from her website: “LJ Shield” is “a long-lasting, non-toxic shield that helps protect garments against odour causing bacteria and mould. It is applied as a water-based, non-toxic mist that adheres to the fabric to act as a shield of protection for the garment.”

Back in July last year, she added: "LJ Shield completely eliminates the possibility of spreading any deadly viruses (and let's face it, the one we're all thinking about is COVID-19)".

If activewear garments (leggings, fitness tights, tops, sports bras – see photo), provide protection against viruses, then consumers will chose them over garments that do not. But claiming health benefits is a minefield because of consumer protection laws.

Lorna Jane got into trouble because it claimed its secret spray gave protection to its customers against deadly viruses such as COVID-19, without having scientific evidence to back up its claims.

The Therapeutic Goods Administration - the health products regulator fined Lorna Jane $39,960.

The Australian Competition and Consumer Commission - the consumer advertising watchdog has commenced Federal Court proceedings for a penalty several times larger, injunctions and a compliance program.

The Court proceedings will be defended, so the jury is out on whether a fabric spray can protect against coronavirus. Lorna Jane has said her argument will be: "We are saying LJ Shield is an added protection like hand sanitiser but for the clothes you wear".

For more details click on Now the ACCC is taking Lorna Jane to court for false 'anti-virus' advertising

 


 

Trivago's bag of tricks exposed

Trivago is a popular website which allows the public to compare hotel prices.

If you enter your destination and stay dates, a range of hotel rooms will be displayed. At the top of the list are the best room rates for like-for-like rooms.

If the traveller clicks on a room price, they will be redirected to the hotel's booking site to make the booking.

So where does Trivago make its money? Trivago does not charge a commission to the hotel for the booking. Instead, Trivago charges the hotel 'pay per click'. The amount hotels pay per click is left to the hotel, with the incentive being that the more the hotel offers to pay per click, the higher the ranking in the search.

Three years ago, the Australian Consumer Watchdog - the ACCC (Australian Competition and Consumer Commission) - began investigating misleading practices Trivago used in its marketing

Recently, the Federal Court of Australia found Trivago guilty of four misrepresentations, or 'tricks'. They were:

  1. Find cheap hotels on Trivago - The Court found that the hotel rooms on top of the list were the cheapest only 33.2% of the time. The reason was that Trivago's Algorithm favoured hotels which paid higher fees per click.
     
  2. Price comparison - The Court found that the higher red strike-though price which appeared on top of the best price was not for a comparable room.
     
  3. Highlighting the top room price - The Court found that Trivago went to great lengths to highlight the top room price, without making it clear that it was the top room only because it paid the highest fee per click.
     
  4. The website was transparent - the combination of 1, 2 & 3 meant that the website was not impartial, objective and transparent, even though it gave that impression.

For more details on the Federal Court decision, click How the Trivago online business model failed the Australian Consumer Law test

 


 

Short sighted marketing lands Oscar Wylee in hot water

Oscar Wylee, an optometry and eyewear retailer, targeted socially-conscious consumers by promising to support charitable causes. Specifically, they promised that each time a consumer purchased a pair of spectacles they would donate a pair to someone in need.

But its actions did not match its promises. They donated only one pair for every 100 pairs sold.

This landed Oscar Wylee in Court, where it was ordered to pay a fine of $3.5 million.

The lesson is that the Consumer Regulator, the ACCC, will use the full force of the Australian Consumer Law to bring retailers who make false promises into line.

See: Oscar Wylee accepts $3.5 million penalty for false ‘Pair for a Pair’ promises


 

HealthEngine hits legal obstacles

Digital Health and Telehealth are hot technologies during these pandemic times.

HealthEngine operates Australia's largest online health marketplace and is a leader in these technologies.

But its business model has hit legal obstacles in recent years.

The first is patient testimonials, which HealthEngine doctored to make more favourable to its participating practices.

The second is passing on private patient information to health insurance brokers in return for a referral fee.

These practices have ceased, but a $2.9 million fine ordered by the Federal Court of Australia is causing pain.

For more, click on my article:

 


 

For viagogo, profit comes before all else

Rarely have I heard a Judge be so scathing about a party's misbehaviour as Justice Katzmann was about viagogo! This is a selection:

"Viagogo’s responses give it the appearance of being a company that is indifferent to the interests of Australian consumers and which prefers to elevate its own profit motives above those interests, even when on notice of the potential for harm being done.”

"The representations were on an industrial scale for the relevant period."

“Viagogo’s corrective action [to change its website] was taken very late [some time after the delivery of the liability judgment] and for it was the legal equivalent of drawing teeth.”
Small wonder the penalty was $7 million.

For more, see this link

 


 

Can your Lorna Jane gym clothes protect against Covid-19?

What better time to market “anti-virus activewear” than in the midst of a COVID-19 pandemic?

That's what Lorna Jane, a leading Australian women’s activewear brand did.

It made three virus protection claims when advertising its range of sports bras, tights, leggings, tank tops and gym clothes:

  • Its “anti-virus activewear” prevented and protected against infectious diseases.
     
  • It launched its “LJ Shield exclusive technology”.
     
  • It had worked for two years to develop a “chemical-free treatment that when applied to activewear, protects wearers against viruses and bacteria”.

Trouble was, it did not realise that when making health claims, it needed to comply with the Australian Therapeutic Goods Administration Guidelines.

To find out what happened, click on my article here

 


 

Warning bells are ringing for spam emails

Woolworths has been fined $1 million for sending over 5 million spam marketing emails, such as in the image.

The fine was imposed by the spam email watchdog, the Australian Communications and Media Authority, because Woolworths failed to process 'unsubscribe' requests within the 5 day time limit set under Spam Act. In all, 5 million spam emails were sent - they were spam because they were sent despite unsubscribe requests.

Woolworths blamed ‘technical and systems issues’, but this did not change their culpability. They were culpable in spite of the explanation.

This brings me to the 2 rules to follow when sending marketing emails.

If you want to stay on the right side of the law:

(1) Before sending obtain the customer's consent to join the mailing list; and
(2) Stop sending when you receive an unsubscribe request.

For more details, click on my article Woolworths spam emails fail on legal and marketing levels

 


 

A Machiavellian plan?

Niccolò Machiavelli is famous for his clever political plans in his book The Prince written in 1513.

This is the story of a modern day Machiavellian plan.

The scene is a restaurant bearing his name, Machiavelli Ristorante Italiano in Clarence Street Sydney.

The players are the restaurant manager and the investor.

The plot The players jointly purchased the restaurant for a price of $850,000, of which $450,000 was paid in cash to an associate of the seller, which the manager paid, and $400,000 was paid under a proper Contract, which the investor partly financed.

The business was awash with cash: the staff wages were paid in cash stuffed into envelopes, suppliers were paid in cash and the players paid $1,000 a week to each of their families in cash. They kept two sets of books - the tax books without the cash entries and the true books with the cash entries.

The players started to argue. The manager sidelined the investor by blocking online access to the financial accounts by making them read-only.

The Machiavellian Plan The investor decided on a plan to force the manager to buy him out for $600,000 by using the threat of liquidating the business as his bargaining lever. The manager refused. The investor went to court to ask the court appoint a liquidator claiming he was being oppressed because access to the financial accounts was restricted.

The result Justice Black was appalled by the cash transactions and the tax evasion. He decided not to help either the investor or the manager and refused to make court orders for a buy out or for the appointment of a liquidator. Justice Black would have referred the court file to the Australian Taxation Office had the parties not voluntarily disclosed the true position to the ATO before the hearing.

The moral The courts won't help people with Machiavellian plans if they are running a cash business.

For my case note click on Don't be a minority shareholder without a shareholders agreement for protection

 


What's so hard about setting up a burger business?

Making a burger is so simple - Grill a meat patty on a barbeque. Add tomato sauce and lettuce, and put it in a roll and there you have it! Your burger is ready to eat.

A burger business is not so simple. Why not? Because there is some very serious competition: McDonalds, Hungry Jacks, Grill'd, and many more. All told, there are more than 10,000 burger shops in Australia.

In 2016, two young players decided to set up a burger business. Instead of coming up with a new name and concept they decided to use the name of burger store from the USA called In N' Out, which had run successful pop-up events in Australia.

The called it Down N' Out. They copied the menu, with offerings such as ' Protein Style' and 'Animal Style' burgers, and 'Not So Secret Menu'.

Not unexpectedly, it has all ended in tears in the Federal Court of Australia.

The Court has ordered the destruction and delivery up of all materials bearing the Down N' Out name, the take down of the Facebook pages and Instagram page, giving up the domain name and removing the name and logo from its burger bar in the Sydney CBD. What's more it will pay In N' Out's massive legal fees and pay compensation.

To answer the question - it's not hard to make a burger. What is hard when setting up a burger is that you can't copy anyone else's business, especially when it comes to the name.

For more click on my article Court rules against Hashtag Burgers using Down-N-Out branding pending an appeal


 

Burger Wars - How In-N-Out Burgers closed down a copycat burger store

Imagine if you had been around in 1904, when burgers first became popular, and registered 'BURGER' as a trademark for a meat patty sandwiched in bread.

Today, even a royalty of 0.1 cents per burger would give you an annual income of $1 billion worldwide. But don't think of rushing out and registering the word 'Burger' now because it is too widely used to be registered!

Today, Burger chains use trademarks to protect their name and the names of their menu items - if you see TM beside a word or logo on a container, cup or wrapping, you will know that it has been trademarked.

In-N-Out Burgers has 300 restaurants in California, is a globally recognised brand and is the 'restaurant of choice' for celebrities after glamorous affairs such as the Golden Globes after party. Since 2012, it has held pop-up events in Sydney, Melbourne and Perth, which has built upon its social media presence to establish a reputation in Australia. It has trademarked IN-N-OUT, ANIMAL STYLE and PROTEIN STYLE in Australia.

Enter two entrepreneurs who were inspired by an In-N-Out pop-up and branding decided to hold pop-up events and then open permanent restaurants, with the trading name Down N' Out Burgers, with copycat menu items and decor. See the images of the trademarked names.

As you would expect, In-N-Out issued a cease and desist letter, which was mostly ignored.

Last week, the Federal Court found that Down N' Out had acted misleadingly and deceptively, and will order Down N' Out to remove all offending names and decor and pay compensation. The Court relied on the fact that Down N' Out had infringed In-N-Out's trade marks, had been deceptive and was guilty of passing off.

Trademarks are very powerful - infringe them at your peril!

For my case note on the Federal Court decision click on Burger Wars: In-N-Out vs Down N' Out.

     VS    


 

Four reasons why Trivago hotel room reviews can't be trusted

The Trivago hotel room comparison website was put under the spotlight by the Federal Court of Australia last week, and was found wanting! As the Court put it, 'Trivago misled the public as to the nature, characteristics and suitability for purpose of the accommodation search service provided by the Trivago website'.

The Court found that Trivago hotel room reviews can't be trusted for these four reasons:

  1. The hotel rooms are reviewed by a secret algorithm. But just like a cheap pizza is made with few ingredients, Trivago displays the cheapest hotel room by inputting only prices in its algorithm - it does not include non-price attributes such as free breakfast, refundable tariffs, bed size or pay at check-in as inputs.
     
  2. The Online Booking Sites pay Trivago a Cost per Click - a fee each time a customer clicks on their link. Trivago rewards Booking Sites and Hotels which offer to pay the most per click with 'Top Deal' status. And Trivago punishes Booking Sites and Hotels who won't pay the minimum it demands per click by leaving them out of the room comparison.
     
  3. The hotel room comparisons are not 'like for like' because the comparisons are not necessarily for the same room type. A hotel room may be cheaper because it can be overlooking a carpark, compared with a hotel room which looks the same internally but is overlooking the sea. This is not mentioned.
     
  4. The 'Top Deal' is displayed is visually appealing way. It has a relatively large font, has a white space around it, it is green in colour above a green "View Deal" button. The comparison rooms are in small grey font to the left. See the image. Behavioural scientists said that the time-poor consumer would click the button without reviewing the comparable rooms.

The Court concluded that in only 33.2% of the time was the 'Top Deal' highlighted by Trivago the cheapest price.

For a full analysis of the Court's decision, click on my case note Cheap rooms? Probably not? Trivago's top deals are hotels which pay the most


 

Did you know that your mobile phone allows Google to track you everywhere you roam?

The Australian Competition & Consumer Commission (ACCC) has uncovered a hidden setting in Android phones which allows Google to track your location, even if you have chosen not to share your location.

In a new legal action in the Federal Court, the ACCC alleges that Google has acted deceptively:

by creating the impression that 'You're in control' of your location data by showing a setting in the Location History section of the Privacy Terms that location tracking is turned off - ‘Don’t save my Location History in my Google Account’.

when in fact another setting - the Web & App Activity remains turned on and tracks your location, according to ACCC chair Mr Rod Sims. It is deceptive because the Web & App Activity setting is kept hidden - there is no warning in the Location History section that it even exists and it is hard to find.

Referencing Google's motto of 'Don’t be evil’, the ACCC alleges that Google has 'caused harm to consumers' by depriving them of making an informed choice about location data settings, and by using the data collected for targeted advertising. Targeted advertising is advertising which is directed to consumers according to their known preferences and search engine activity.

So, if you don’t want to receive targeted advertising on your mobile phone, or want to keep your location private, switch the Web & App Activity setting to ‘no’.

For more information, click on this link ACCC wants transparency from Google about data practices and disclosure for location data obtained


Memo to small business: you need Google and Facebook for digital marketing

The ACCC Final Report on its Digital platforms Inquiry has systematically revealed the great power that Google and Facebook have when it comes to advertising and marketing, particularly for small businesses.

The Report explains why, using a travel business to illustrate:

“Online advertising has helped businesses build a brand and following through social media. In particular, small businesses have benefited in advertising and reaching customers.”

“Customers already using Google Search for generalised search queries would be inclined to also use Google Search for specialised search queries, such as information on travel services, including flights, tours and accommodation, because users display customer inertia. The same cannot be said of users of specialised travel services, so this source of traffic is not available to suppliers of specialised travel search services.”

“For these reasons, even when specialised search services have considerable reach, such as travel and hotel booking search services, Google’s general search service enjoys a competitive advantage over them.”

While this power explains why small businesses might use paid advertising on social media, there are other cost-effective ways to build a social media presence, such as:

  • Invest in a high quality, responsive and information-rich website
     
  • Work with a qualified digital marketing agency to ensure you are keeping up to date with the ever-changing requirements of website design and navigation, SEO, keywords, user experience, page load times etc.
     
  • Build your brand online by publishing regular, fresh, relevant and low/no-cost content that is both helpful and interesting for your customers such as educational videos, informational blogs, buying guides and cost calculators

For more details click on my article How Google and Facebook dominate online advertising and searches


Is this the end for fake boomerangs?

It's not just plastic boomerangs that are fake. It's cheap imported boomerangs from South-East Asia such as Vietnam and Indonesia. If you look at the image, only the boomerangs at the top right were made in Australia.

It's not generally known, but an extraordinary statistic that emerged from the evidence given to a recent Parliamentary Inquiry was that 80% of the souvenirs sold in Australia purporting to represent First Nations cultures are in fact imitation products with no connection to Aboriginal peoples. The Inquiry recommended a new law to protect Indigenous Cultural Intellectual Property.

In the meantime, the prosecution of Birubi Art, a significant manufacturer and seller of artefacts with Australian Aboriginal Designs, was reaching its conclusion in the Federal Court of Australia.

Justice Perry found that the artefacts, their labelling and their packaging gave the misleading impression that they were made in Australia and had been painted by Australian Aboriginal persons. In fact, 50,000 boomerangs, bullroarers, didgeridoos and message stones it sold had been painted with traditional Aboriginal designs in Indonesia by Indonesians.

On 26 June 2019, Justice Perry ordered Birupi Art to pay a fine of $2.3 million for breaches of the Australian Consumer Law.

But it's a Pyrrhic victory, because Ben Wooster, the owner of Burubi Art had already put the company into liquidation. Before doing so, he transferred the artefacts business to a new company. The business is continuing to operate in Kippa-ring in Queensland. Currently, he is pursuing clothing sellers for unauthorised use of the Aboriginal Flag emblem on clothing, claiming exclusive rights to the emblem from the designer.

We can only hope that this episode will be enough to prompt the Federal Government into introducing proper protection for Indigenous Australian culture, especially its artwork and designs.

For my case note on the Federal Court decision click Indigenous Australian artistic designs are protected by a new court ruling


 


If your flight is delayed or cancelled, the airline must offer a fare refund

The consumer watchdog, the ACCC has taught Jetstar an expensive lesson to not discriminate against budget travellers when it comes to fare refunds.

Jetstar had a 'No Refunds' fare rule for passengers who booked the basic Jetstar 'Starter fare'. This fare pays for a seat and carry-on baggage only. If a passenger wants entertainment, food and flight flexibility (including refund rights) then they must pay more.

In other words, Jetstar took the view that you get what you pay for. And even if Jetstar delays or cancels the flight there are no refunds for 'Starter fare' passengers.

The ACCC took Jetstar to the Federal Court and the Court fined Jetstar $1.95 million because it is against the Australian Consumer Law to deny passengers the right to compensation if an airline cannot provide flights or provide them within a reasonable time.

As a result, where a flight is delayed by more than 3 hours or cancelled because of weather events, air traffic control issues, industrial action by a third party, security issues and so forth, airlines in Australia must:

  • Attempt to book on the next available flight they provide, at no extra cost;
     
  • If they cannot, provide a flight credit or a refund.

For my case note click No Refunds FareRule costs Jetstar $1.95m


 

Voltaren - rubs the ACCC up the wrong way!

In 2010, the marketing department of Novartis had a brilliant idea:

Why not repackage Voltaren Emulgel, which is used for treating general inflammation and pain of traumatic or rheumatic origin, as a speciality osteoarthritis treatment? And why not call it Voltaren Osteo Gel and put on the label that it is good for mild forms of osteoarthritis of the knees and fingers, and charge a little more for it?

So, Voltaren Osteo Gel was created - with the same formula as Voltaren Emulgel but with different packaging designed to appeal to “those with more years behind them but still “forever young” who suffer from pain associated with osteoarthritis”.

On the other hand, Voltaren Emulgel dropped references to osteoarthritis and was marketed to an entirely different group - "the young (or young-at-heart) “weekend warriors” with sports injuries or strains want[ing] pain relief".

This is differential marketing. It resulted in increased sales, and worked beautifully until ... the ACCC, the 'national consumer champion', took an interest and took Novartis and GlaxcoSmithKline (GSK) to the Federal Court, arguing that to sell the same product in different packaging was misleading and deceptive contrary to the Australian Consumer Law.

GSK admitted that the packaging was misleading, and so it added the words “Same effective formula as Voltaren Emulgel” on the Voltaren Osteo Gel packaging (see image). This addition was enough to no longer make it misleading, according to the Federal Court.

After it went to Court, GSK did what it might have done earlier to solve the problem by bringing out a new version - Osteo Gel 12 Hourly – with twice the concentration of the active ingredient. The different formulation means it complies with the Australian Consumer Law.

The 'take out' is that packaging the one product in two ways is possible, but the packaging must make clear that it is the same product. Otherwise, the product needs to be changed.

For my case note on the decision click Voltaren: Is it possible to differentially market the same product and comply with the Australian Consumer Law?


 


Worst ... ever! Can you remove nasty comments about your business from social media?

Businesses live and die upon word-of-mouth referrals. Satisfied customers spread the word by making compliments, but dissatisfied customers spread 'worst ... ever!' comments.

These days, social media spreads word-of-mouth far and wide: on Facebook, Google, TripAdvisor and many more digital platforms. Inevitably, negative comments from customers and competitors will be posted online. Too many negative posts and reviews online will damage the reputation of the business, and which may ruin the business.

In this article we take a quick look at the legal strategy and at the marketing strategy a business can use to deal with negative comments posted on social media.

Legal Strategy to remove negative comments -

Start by using the Facebook/Google/Tripadvisor reporting mechanism to flag a post as ‘Hate speech’, ‘hateful’, ‘inappropriate’ or ‘improper’. This can be effective if the comment is particularly nasty, but it will not work if it only damages a reputation because criticism is treated as ‘freedom of speech’.

As a fallback strategy, insert a 'non-disparagement clause' into the terms and conditions of the contract with the customer. This clause makes it a breach of contract for a customer to make nasty (disparaging) comments about the business.

Marketing Strategy to neutralise negative comments -

The marketing strategy starts with setting up online sites for the business - a webpage, a Facebook page, a Linkedin page, a Google page, and pages on specialist sites such as TripAdvisor for hotels and restaurants. This establishes a strong presence.

The marketing strategy continues with continuous monitoring - blocking/hiding/removing nasty posts from sites which are under the control of the business, and by writing responses to reviews on sites which are not under control the control of the business.

For more information about the legal strategy, particularly non-disparagement clauses, click on my article - Can I remove negative comments posted on social media using a non-disparagement clause?


Court bans fake boomerangs (made in Indonesia)

From 2014 to 2017, Birubi Art sold 18,000 boomerangs, bullroarers, didgeridoos and message stones to tourist outlets. Priced from $9.95, they were sold as cheap souvenirs.

Birubi Art labelled the artefacts and their boxes as “genuine Aboriginal Art”, “100% hand painted”, “handcrafted Australian Boomerang” and “Royalties are paid”.

The reality was different. The objects were made by artisans in Indonesia; no Australian Aboriginal person was involved; the only cultural connection was that the designs were created by Trisha Mason an aboriginal artist (who received royalties).

Enter the consumer regulator, the ACCC. They prosecuted Birubi Art for false and misleading representations, namely: made in Australia and hand painted by an Australian Aboriginal. On 23 October, 2018, the Federal Court declared these representations were false in breach of the Australian Consumer Law.

According to Justice Perry, these artefacts must be made in Australia because they are traditional Australian Aboriginal Cultural artefacts. Souvenir sellers and their suppliers may face prosecution for selling fakes if they are sourced overseas. And if the label says ‘hand painted’, then an Aboriginal person must have done or supervised the painting (i.e. have a more active role than to supply the designs).

A hearing on penalties and orders to be made against Birubi Art is pending.

For more details click on my case note A boomerang is a fake if it’s not made in Australia (but is labelled as if it was)


Is the advertising agency to blame if the advertising campaign flops?

Picture the scene: You are an advertising agency and your brief is to make a TV Commercial for a shampoo which restores thinning hair. Let's call the brand évolis.

Your creative team comes up with this script for a "Hers" commercial: The camera focuses on a woman standing at the cliff’s edge on a “wild looking coastline during a windstorm … Her beautiful, long thick mane is flying all over the place in the wind”. (see image)

You call the campaign "Long Live Hair".

Your advertising budget is $2,000,000 over 12 months. It covers TV commercials, digital partnerships, influencers and social media. After just 2 months, the client cancels because product sales have not increased. The client blames the advertising agency for the campaign being a complete flop and refuses to pay.

This scenario is taken from a NSW Supreme Court decision last week in which the agency (Ikon) sued and recovered from the client (Advangen) $939,055.65 in unpaid invoices.

This is a summary:

If an advertising agency makes predictions based on reasonable grounds and if they conduct the advertising campaign as promised in the Media Plan and the Services Agreement, then they are not liable for misleading conduct or for breach of contract.

If an advertising agency has the creative work (the TV commercials, etc.) signed off by the client, then it is not responsible if sales targets are not met. The client assumes the risk of failure.

The agency is not to blame for the failure of an advertising campaign, and is entitled to receive full payment for the work done.

For a more detailed analysis click on my case note Is the advertising agency legally responsible if the campaign is a complete flop?


H.J. Heinz fined $2.25m for selling kids snack food with too much sugar

Sugar is now on everyone's lips - at least when it comes to talking about excess sugar content in processed foods.

H.J. Heinz got into trouble with the consumer regulator (ACCC) for selling Shredz kids snack food because each stick contained two thirds of the recommended daily intake of
sugar for 1 to 3 year old children (its target market). The sticks were 'jubes' made from highly concentrated fruit juice and vegetable purees.

The ACCC argued that it was misleading and deceptive for H.J. Heinz to give the impression that the Shredz snack food was healthy and nutritious by placing images of smiling children climbing rope ladders into a tree and an apple, pumpkin and other fruit and vegetables on the front label of the packet (see photo), when the Shredz snack food contained too much sugar to be healthy.

The Federal Court agreed with the ACCC, and found that the Shredz snack food was not healthy for 2 year old children because:

  • two thirds of each stick was sugar, which was too much in the diet of a 2 year old; and
  • The Federal Court accepted the link between sugar intake and obesity, and the ‘stickiness’ of the sticks with dental caries.

After considering many factors, including that H.J. Heinz ought to have known that the Shredz snack food was unhealthy, the Federal Court imposed a fine of $2.25 million and ordered H.J. Heinz to follow a Compliance Program. Note: Shredz products are no longer on sale.

For more information, click - A sweet victory for the ACCC leaves a sour taste for H.J. Heinz


Meriton in trouble for filtering out negative guest reviews

The long arm of the law has caught Meriton Suites and has fined it $3 million for filtering out negative guest reviews, leaving the favourable reviews of its serviced apartments.
While Meriton is known as a high rise apartment builder, it has 13 high rise serviced apartment buildings in Sydney, Sydney Surrounds, Brisbane and the Gold Coast. The hotel business is proving to be very successful, with 4 more high rise buildings of what it calls Meriton Suites under construction.

By encouraging guests to post reviews on TripAdviser, the world's largest travel website, a hotel can increase its ranking, gain more prominence, and increase bookings. To encourage guest reviews, TripAdvisor provides a service where if a hotel supplies it with the email addresses of its guests and an email template, then it will email the guests and prompt them to write reviews. It is called Review Express.

Meriton Suites knows that to prosper in the highly competitive accommodation industry, it needs to encourage favourable reviews. So it adopted a company policy that the check out clerk would ask "Have you enjoyed your stay?" If the response was negative, they would add 'MSA" to the guest's email address before sending it to TripAdvisor, to ensure it would 'bounce'. And if there was a major service disruption, such as lifts not working, they would not send the email address to TripAdvisor at all.

The Federal Court has held that this is deceptive conduct, in breach of the Australian Consumer Law. Meriton was ordered to pay a $3 million fine, to not engage in manipulating guest reviews for 3 years and to adopt a strict Compliance Policy.

The lesson for Meriton is to say ‘sorry’ and do its best to deal with the complaint.

For more information, click on my case note Meriton Suites fined $3m for manipulating TripAdvisor Reviews


Legal proof that Sugar causes Weight gain and Tooth decay is now available

Adding one teaspoon or two of sugar to tea is normal. Adding 40 teaspoons of sugar to a can or energy drink is also normal. But it won't be normal for much longer.

Here is why:

Last week, the Federal Court gave a landmark decision that high levels of sugar in food are unhealthy because they lead to weight gain and dental caries. This is the first time this link has been made by the courts in Australia.

The decision concerned a Heinz snack food for children aged 1 - 3, called Shredz. The package contained images and words which gave the impression that the food was healthy. There was a young boy climbing a tree, a green apple, strawberries, pumpkin slices and corn kernels. There were statements - 99% fruit and veg, no preservatives and no artificial colours or flavours.

The food sticks inside the packet were high in sugar. It was not added sugar, it was sugar concentrate. Specifically, a high proportion was apple which had been mashed and dehydrated so much that the sugar level was 68.7% by weight. One serve had the equivalent of three teaspoons of sugar.

The Court heard evidence from expert nutritionists and dentists. It relied upon the World Health Organisation Guideline for sugar intake for adults which for a 2 year old child, the daily limit for added sugar / sugar concentrate is three teaspoons.

The Court concluded that the Shredz snack food was unhealthy because a child could be expected to consume more food with added sugar / concentrated sugar during the day, in addition to one serve of Shredz. It was also unhealthy in terms of dental caries because of the high concentration of sugar, and the 'stickiness' of the food sticks.

By formally proving the link between sugar and health, particularly in terms of weight gain, the public health consequences of excessive sugar intake have been emphasized. The momentum is building to restrict the use of sugar in food and drink, and to tax sugar (as many countries have already done).

For more details on the decision, click Too much sugar makes Heinz snack food unhealthy for little children


Is Nurofen better than Panadol a fact or just misleading marketing?

The pain relief market in Australia is lucrative - sales were $580.54 million in the 2015 year in pharmacies, supermarkets, petrol stations and convenience stores.

Reckitt the maker of Nurofen and Glaxco the maker of Panadol have 71% of the pain relief market, in approximately equal shares.

So it comes as no surprise that Reckitt would want to increase its market share in such a lucrative market. Based on a 1996 clinical study, it started a mass-marketing campaign headlined by NUROFEN IS BETTER THAN PARACETAMOL for common headaches.

The overall impression given by the advertising (see the picture), particularly the graph with its bright red line for Nurofen and 4 hour time frame, was that Nurofen delivers faster and more effective relief from pain caused by common headaches than does Panadol or paracetamol.

Glaxco was anxious to defend its market share for Panadol. It decided to take legal proceedings to stop the Nurofen marketing campaign, relying upon the argument that the present state of scientific knowledge did not support the claim that Nurofen was better than Panadol for headaches.

Glaxco was successful in the Federal Court. The Court ruled that claims that Nurofen is better than Panadol for headaches were misleading advertising.

Reckitt will need to find another way to increase its market share!

For my case note on the decision click - Is Nurofen better than Panadol for a headache? The Federal Court decides

 


Is it misleading to charge an extra $3 for Voltarin Osteo Gel?

Look at the picture and you will see the two types of Voltarin Gel that you can buy at a pharmacy or in a supermarket, both of which are described as good For the temporary relief of local pain and inflammation.

Voltarin Emugel is the basic gel, while Voltarin Osteo Gel looks to be superior because this is added to the description associated with mild forms of osteoarthritis of the knees and fingers, and it sells at a higher price - at least $3 higher.

Why then is the Australian Consumer Watchdog - the ACCC - is taking the makers, GSK and Novartis, to the Federal Court claiming that they are misleading the public when they claim Voltaren Osteo Gel is superior to Voltaren Emulgel?

The reason is simple - both types contain exactly the same ingredient - diclofenac gel 11.6mg/g. When the ACCC pointed this out to GSK and Novartis, they added on the Voltaren Osteo Gel label Same effective formula as Voltaren Emulgel. They did not remove the added description associated with mild forms of osteoarthritis .... or remove 'Osteo' from the name.

GSK and Novartis justify the higher price because the Osteo Gel has a large blue triangular cap (see the picture) which is easier to open for arthritis sufferers than the small grooved round cap on the Emulgel tube.

The Federal Court case has only just begun. Watch this space to see whether the Court agrees with the ACCC that the description and the higher price are misleading the public or GSK and Novartis succeed in proving the description and higher price are justified.

For more information click - GSK and Novartis are in hot water for mislabelling Voltaren Osteo Gel to charge a premium price



Is a $6 million fine too low for falsely labelling Nurofen packets?

To recap, what Reckitt Benckiser did between 2011 and 2015 was to sell the identical pain relief product - Nurofen - in 4 differently labelled packets, at almost twice the price of the standard Nurofen packet - see photo.

The Federal Court found that the labels were misleading. The four packets had labels which stated that they were targeted for different pain - one for Migraine Pain, one for Tension Headaches, one for Back Pain and one for Period Pain. In fact, each packet contained the same tablet, and could be taken to relieve any of the pains.

The trial judge fined Reckitt Benckiser $1.7 million which the appeal court increased to $6 million.

The question is - was the fine still too low considering that sales were about $45 million, with at least $20 million in profit? In other words, is a fine of $6 million high enough to discourage it hapening again, or is it too low and so will it be considered just the cost of doing business?

Belatedly, the Australian Competition and Consumer Commission which had asked for the $6 million fine agrees. It now proposes that fines based on profits derived from the offending conduct - as high as 3 times the profits.

Too late for the Nurofen case - the horse has bolted!

For a detailed analysis click - Higher penalties are coming for conscious breaches of the Australian Consumer Law


What happens to the seller if the oregano you buy is 50% olive leaf?

Dried oregano gives a spicy Mediterranean flavour to tomato, pizza, beans and lamb.

It was therefore a matter of great concern when the Australian consumer watchdog, the ACCC, tested packages labelled Oregano, 100% Oregano and pure Oregano and found impurities, mainly olive leaf.

While oregano does grow around olive trees, to have 50% of the package consisting of olive leaves is more than just a coincidence! It was proof positive for the ACCC to pursue suppliers and retailers who marketed the oregano for misleading the public.

And so it was that the ACCC has punished the oregano suppliers and retailers for not taking precautions to ensure that the oregano they sold was unadulterated.

Some were reprimanded after taking action to remedy the misrepresentation, others provided court enforceable undertakings to test the products for 3 years, and Hoyt's Foods was fined $10,800. They were all 'named and shamed' by the ACCC in media releases.

For more detail, click - ACCC protects consumers against false marketing of oregano


There’s no such thing as a free bet in Australia

Free drinks, free coffee, free samples, free admission ... all these offers use the word free to catch the attention of the customer to sell a service or product.

So it was that the online gambling company, Bet365 decided to use the phrase $200 FREE BETS FOR NEW CUSTOMERS on the Opening Page of its website. It was very successful - active users increased by 83% over the previous year and wagering revenues increased fourfold.

There was only one problem - when they posted the FREE BETS phrase, they put an asterisk after the word CUSTOMERS*, but did not put a click through button '*Terms & Conditions Apply' underneath. Had they done so, then the new customer have learned that they could only claim $200 in free bets if they staked three times that amount and could withdraw their winnings only if other conditions were satisfied.

Bet365 were prosecuted by the Australian Consumer Regulator, the ACCC, because Bet365 had displayed the FREE BETS phrase on its website without the Terms & Conditions click through button for 302 days. The Federal Court found that this was likely to mislead consumers and fined the two Bet365 companies involved a total of $2,750,000 for breaching the Australian Consumer Law.

There are two lessons here - for the consumer, there is no such thing as a free bet (or anything else) because terms and conditions apply; and for businesses, to make sure that the terms and conditions which apply to free offers are available to the consumer at the point where the free offer is displayed.

For more information from a legal perspective, and for Michael Field's comments from a marketing perspective, click - There's no such thing as a free bet in Australia


Did you know that all Nurofen Specific Pain Range tablets have the same active ingredient?

Would you be angry if you were told that despite the label "Migraine Pain' and the distinctive violet packet, the tablet you are buying is exactly the same as the one in in the green packet labelled 'Back Pain' or the burgundy packet "Tension Headache' or the magenta packet 'Period Pain'?

The Australian Consumer & Competition Commission became so angry with the makers of Nurofen, Reckitt Benckiser, that last year they prosecuted them for misleading labelling, in breach of the Australian Consumer Law.

Last week, the Federal Court ordered Reckitt Benckiser to pay a fine of $1.7 million for its misleading packaging and website. In addition, they were ordered to change their packaging to make it clear that the tablet was suitable for the relief of all kinds of pain.

So, next time you are in a pharmacy or supermarket looking around for a pain relief medication, look at the Nurofen Specific Pain Range packets, see how they are labelled as good for specific pain, and notice how they all contain the same active ingredient - ibuprofen lysine 342 mg

See Full Article


How the Nurofen Specific Pain Range marketing strategy was undone as misleading by the ACCC

It was a brilliant marketing strategy … instead of marketing the fast-acting Nurofen for pain relief as one product effective for a range of pains (as the standard Nurofen is marketed), to market it as four products targeted to specific pains, namely migraine pain, tension headache, period pain and back pain. It’s known as segmenting the market.

This marketing strategy was undone as misleading as a result of the recent decision of the Federal Court of Australia (Edelman J) in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 4) [2015] FCA 1408 (11 December 2015).

See Full Article


Not Everything Is Fresh Today!

Coles Supermarkets position fresh fruit, fresh cut flowers and fresh vegetables at the entrance to give shoppers the impression of entering into a natural oasis where everything is fresh today.  

As the shopper passes by the fresh produce displays, according to the Coles website they see the “golden baked crust” and smell “tempting aromas” of the fresh bread displays below the “Baked Today, Sold Today” signage at the “Coles Bakery”.

Is it any wonder that the shopper believes that the bread displayed was freshly baked on site?

See Full Article


Coles fined 3 cents per loaf for misleading 'par-baked bread' marketing

See Full Article


© Copyright 2020 Cordato Partners