It used to be simple to label a product or to advertise a product on social media or mainstream media. All that was needed was to list the ingredients. Recently, the Australian Competition and Consumer Commission (ACCC) has added a layer of complexity. It has taken two product suppliers to task for misleading descriptions on labels and on social media, using the Australian Consumer Law as its “weapon of choice”.
These two examples illustrate how an ‘innocent’ description might be caught in the net cast by the ACCC to catch misleading descriptions. In the first, the product claim was made on the supplier’s website. In the second, the product claim was made on the label.
In both cases, the ACCC sanctioned the suppliers for contraventions of the ACL by imposing penalties and compliance measures.
The Australian shark product claims
The ACCC has accepted a court-enforceable undertaking from Universal Pharmaceuticals Pty Ltd to remove two product claims from its Wealthy Health website relating to its product – Wealthy Health Organic Squalene 1000mg with Vitamin E, which was sold as capsules. ACCC Media Release 46/23 (5 May 2023)
The product claims were:
- “sustainably sourced from sharks from the crystal-clear oceans of Australia”; and
- “obtained from the clear oceans surrounding Australia”.
The product claims were misleading, false or deceptive because Universal Pharmaceuticals knew from at least 2019 that the squalene (a colourless oil traditionally produced from shark liver), “was not exclusively sourced from Australian waters”.
The product claims contravened the ACL: section 18: misleading or deceptive conduct; and sections 29(1)(a), 29(1)(k) and 33: false or misleading representations, or conduct as to quality, composition, place of origin and characteristics of goods.
Universal Pharmaceuticals admitted the contraventions.
In deciding upon the compliance approach, the ACCC said that Universal Pharmaceuticals knew that:
- its supplier was unable to guarantee that the squalene used in the product was sourced from sharks fished or farmed exclusively in Australian waters; and
- based on information from its supplier, the squalene was sourced from sharks located in waters other than Australian waters.
The ACCC obtained section 87B undertakings from Universal Pharmaceuticals, that it will:
- not make representations that its products contain squalene from sharks sourced from Australian waters unless it has information to support such representations for a period of three years; and
- publish a corrective advertisement on the Wealthy Health website within 30 days and maintain it there for a period of 90 days; and
- establish and implement an Australian Consumer Law Compliance Program for at least three years, which includes Australian Consumer Law training for staff and the development of a complaints system; and
- apologise and offer refunds to two customers who purchased the product between February 2021 and 21 October 2022.
ACCC Commissioner Liza Carver has provided this insight into why the ACCC intervened: ACCC Media Release 46/23 (5 May 2023)
“These types of claims cannot be independently verified by consumers so businesses must be extremely careful they do not mislead or deceive when marketing their products.”
“Consumers are often willing to pay a premium for products that advertise they are made with Australian ingredients, and statements that mislead consumers about the origin of ingredients used may also result in consumers unfairly preferencing that product over other equivalent products in the market,” Ms Carver said.
The images of the product, and the corrective advertisement posted on the website are:
The Pure Vanilla Extract claims
The ACCC issued HBC Trading Australia Pty Ltd (HBC Trading) with two infringement notices for allegedly making false or misleading representations on its product label for its Chef’s Choice vanilla, that it is ‘alcohol free pure vanilla extract’.
HBC Trading has paid penalties of $26,640 under the infringement notices. ACCC Media Release 224/21 (21 December 2021)
“Vanilla is a spice derived from a type of orchid and is the second-most expensive spice in the world (after saffron).
Chef’s Choice used the word ‘pure’ in the product’s name and placed an image of vanilla beans and a vanilla flower on the label, despite the extract containing ingredients not derived from vanilla beans. The ingredients included flavouring in the form of vanillin derived from clove oil, as well as added colour, glycerine and xanthan gum.
While all ingredients were disclosed on the label, this disclosure was in a significantly smaller font than the words ‘pure vanilla’ on the label.”
The ACCC considered the labelling “pure vanilla” to be misleading and deceptive conduct.
“We are concerned that bakers who intended to buy ‘pure’ vanilla to make their cakes and slices could have been misled into buying extract that included additional flavour from a non-vanilla bean source,” ACCC Deputy Chair Delia Rickard said.
“Consumers rely on the accuracy of claims made on food product label, and businesses must ensure their labelling is truthful and not likely to mislead consumers,” Ms Rickard said.
This was the image of the label:
Comments
This compliance activity is one of the ACCC’s 2023-24 Compliance and enforcement policy priorities, that is, consumer and fair trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy.