The COVID-19 pandemic has seen businesses across the globe scramble to adjust to the needs of their consumers over the last year. For many, the focus has been on improving technological infrastructure in order to provide existing goods and services in a volatile environment. For some, the pandemic has presented an opportunity to develop new goods and/or services to cater for changing values among consumers.
Sanitisation products in particular have been a significant area of growth and development. However, as activewear giant Lorna Jane is now finding out, businesses must remember that it is not enough simply to make claims that a product has a particular function and market that it does so. Australian Consumer Law (ACL) provides protections for consumers to ensure that when businesses make claims about a particular product, they are accurate and in often cases supported by scientific evidence or having a technological basis.
LORNA JANE’S ‘ANTI-VIRUS ACTIVEWEAR’
Lorna Jane is a leading manufacturer and retailer of women’s activewear. In July 2020 the company released its ‘Anti-virus Activewear’ range. What followed was an aggressive marketing campaign across various marketing channels, appealing to their now virus-conscious demographic.
The marketing consisted of various statements regarding the purported anti-virus spray, the ‘LJ Shield’, that had been applied to the activewear, for example:
- “LJ Shield – Protecting you with ANTI-VIRUS ACTIVEWEAR”
- “Cure the Spread of Covid-19? Lorna Jane Thinks So”
- “With Lorna Jane Shield on our garments it meant that we were completely eliminating the possibility of spreading any deadly viruses”
Although this campaign ran for only a matter of weeks, up until November 2020 the range continued to be sold with tags that represented that the wearer was permanently protected against pathogens.
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION RESPONSE
In December 2020, the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Lorna Jane. It has alleged that the ‘Anti-virus’ activewear range and its subsequent marketing contained false and misleading statements amounting to a breach of the ACL.
This response from the ACCC is part of a wider prioritisation of protecting consumers in the face of aggressive marketing ploys by brands relating to the Covid-19 pandemic. The concern being that more and more businesses were using the crisis to illegally promote their commercial position and ultimately harm customers.
The ACCC noted the following compounding features in the Lorna Jane incident:
- That there appeared to be no scientific or technological basis, including testing, for the claims made by Lorna Jane, despite assertions that there was;
- The vulnerability of consumers during these trying times;
- That consumers listen to trusted brands and rely on the legitimacy and accuracy of their claims; and
- That Lorna Jane founder, Ms Lorna Jane Clarkson, had personally engaged in the alleged conduct by appearing in a range of media releases.
REMINDER OF OBLIGATIONS UNDER AUSTRALIAN CONSUMER LAW
The Lorna Jane incident, and indeed the public position taken by the ACCC in the current environment, serves as a reminder for businesses to refresh themselves on their obligations under the ACL.
Section 18 of the ACL, which is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth) provides that:
“(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”
It is clear that the ACCC intends to be vigilant on the issue. Those that contravene can expect recourse in the form of:
- Damages; and
- Correctional actions, such as notices to consumers or internal compliance programs.
It remains to be seen what will be made of the Lorna Jane incident. Watch this space for an update when a resolution is reached.
In the interim, businesses need to be conscious of their ongoing obligations to consumers as they adapt to changing markets in the face of the COVID-19 pandemic. A failure to do so can result in serious repercussions.
If you require further advice in relation to your rights or obligations under the ACL, please contact a member of our Commercial Division.