In February this year, we updated you in relation to the proceedings commenced against Lorna Jane by the Australian Competition and Consumer Commission (ACCC) for misleading and deceptive conduct. The proceedings related to the release of Lorna Jane’s ‘Anti-virus Activewear’ range in the midst of the COVID-19 pandemic. You can find our full article here.
On Friday, the Federal Court heard that Lorna Jane had made a number of misleading statements relating to its ‘Anti-virus Activewear’ range, including:
- "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”
The ACCC argued that such claims were without any support testing, were fundamentally untrue and were ultimately a breach of section 18 of the Australian Consumer Law contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth).
The Federal Court agreed with the ACCC, finding that Lorna Jane had committed a breach of Australian Consumer Law that was worthy of a $5,000,000.00 penalty.
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 expected that the ACCC will continue to police this issue vigorously in an attempt to protect ‘vulnerable’ consumers, particularly in the current climate. Those that contravene can expect recourse in the form of:
- Damages; and
- Correctional actions, such as notices to consumers or internal compliance programs.
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. As the Lorna Jane incident has demonstrated, the consequences of getting it wrong can be costly.
If you require further advice in relation to your rights or obligations under the ACL, please contact a member of our Commercial Division.