Heinz faces fines

Published On 01/07/2016 | By Jessica Waters | Consumer protection, Enforcement

Written by our newly appointed senior associate Jessica Waters (congratulations Jess) with senior associate Tamara Hunter

The ACCC has launched a spate of enforcement action and warnings in the last two months, targeting businesses potentially misleading Australian consumers.

Since the beginning of May 2016 the ACCC has issued 15 press releases (averaging 1 every 4 days) about actual or potential breaches of the Australian Consumer Law (ACL). The ACCC has obtained nearly $9.2 million in court ordered penalties and fines (from payment of ACCC Infringement Notices), and in one matter (Sensaslim), the Court imposed the first ever permanent disqualification from managing corporations and a life-time ban from involvement in the weight loss industry or franchises where the person’s involvement is not disclosed. Not surprisingly, misleading and deceptive conduct, unconscionable conduct and false representations are the most common areas where businesses have fallen foul of the consumer protection provisions.

ACCC chairman Rod Sims stated at the National Consumer Congress in March that “Our consumer laws underwrite confident consumer participation in commerce, enhance transparency and inform choice. They also ensure that businesses compete on merit and not falsehoods, and protect all consumers and small businesses from unfairness that has no place in a properly functioning market.”

The ACCC’s enforcement actions, including recent cooperation in enforcement action with the Commonwealth Department of Education and State fair trading regulators, reflect its continuing focus on consumer protection as a means of ensuring fair competition.

In particular, Mr Sims has highlighted Indigenous consumer protection, and the health and medical sector as areas of focus for the ACCC. Unfair contract terms and industry codes of conduct are also squarely within the ACCC’s sights.

Our table below provides a snapshot of the ACCC’s most recent enforcement actions in the consumer space.

This significant uptick in ACCC enforcement action (and the increasing size of penalties) provides a timely reminder that all businesses are subject to the ACL, and of the importance of ensuring that all statements and representations to consumers are fair, accurate and not misleading.

Photo: Flickr / Chris Lim / Resized

Business Products and claims Consumer Law breach Penalty or enforcement action Date
Australian Business Funding Centre Database services to assist small businesses to gain government grant funding
  • alleged false or misleading representations
  • Public Warning Notice

 

27 June 2016
Online Dealz (and sole director Janet Lucas) Cots and stroller said to be “Certified” and “meeting Australian and New Zealand Standards”
  • non-compliance with safety standards
  • misleading representations
  • $100,000 penalty against Online Dealz
  • $20,000 penalty against director Janet Lucas
  • monthly reporting to the ACCC
  • injunctions, costs,
22 June 2016
Heinz “99% fruit and veg” nutritional claims on infant food packaging
  • alleged false and misleading representations
To be determined by the Federal Court.

The ACCC is seeking declarations, injunctions, pecuniary penalties, corrective notices and costs.

21 June 2016
Social-Lites and Elusion (e-cigarette retailers) and their directors Claims that their e-cigarette products did not contain carcinogens or toxic chemicals, or chemicals found in conventional cigarettes Alleged:

  • misleading and deceptive conduct
  • false and misleading representations
  •  directors being knowingly concerned in the alleged contraventions
To be determined by the Federal Court.

The ACCC is seeking pecuniary penalties, declarations, injunctions, orders for an ACL compliance program, publication orders and costs.

20 June 2016
Medibank Private Medibank’s failure to notify Medibank (and ahm) members of its decision to limit benefits paid to members for in-hospital pathology and radiology services. Alleged:

  • misleading conduct
  • false or misleading representations
  • unconscionable conduct
To be determined by the Federal Court.

The ACCC is seeking declarations, injunctions, compensation orders, pecuniary penalties, findings of fact, implementation of a trade practices compliance program, corrective notices and costs.

16 June 2016
Bet365 (and related companies) Promotion of “ $200 Free Bets For New Customers” offer, was misleading because restrictions and limitations (requiring customers to gamble their own money) were not brought to the customer’s attention
  •  false representations
  • $2.75 million penalty
  •  corrective notices ordered to be issued to customers
10 June 2016
Sportscraft Statements on receipts that consumers would not be entitled to return or exchange faulty goods purchased from a clearance store.

Statements on website that it would not exchange or credit note the item more than 21 days after purchase.

  • alleged false or misleading representations about consumer guarantees
  • $21,600 infringement notice
  • Sportscraft also amended its refund and returns policy in store and online.
9 June 2016
Health insurance industry ACCC warning to consumers about potentially misleading private health insurance “save on tax” claims Possibly misleading and deceptive conduct and/or making false or misleading representations, depending on the claim itself None as yet, but the industry is “on notice”.

The ACCC is assessing some representations and may take enforcement action.

2 June 2016
Reckitt Benckiser Claims that Nurofen Specific Pain products were formulated to specifically treat a particular type of pain, although they contained the same active ingredient.
  • misleading and deceptive conduct
  • alse representations
  • $1.7 million penalty

The ACCC had sought a $6 million penalty and is appealing on the grounds that $1.7 million is not an adequate deterrent.

23 May 2016
Snowdale’s brands of Swan Valley, Wanneroo Free Range and Eggs by Ellah “Free range eggs” packaging, representing that the eggs were laid by hens which were able to, and did, go outdoors and roam freely most days
  •  false or misleading representations
Penalties and relief are yet to be determined.

 

The ACCC is seeking declarations, injunctions, pecuniary penalties, implementation of a compliance program, corrective notices and costs.

18 May 2016
Careers Australia Selling VET FEE-HELP diploma courses on the basis that courses were “free” and would increase chances of finding employment, and offering inducements of “free” iPads” and laptops
  • unconscionable conduct
  • false or misleading representations
Undertaking to:

  • repay the Commonwealth government up to $190 million in payments
  •  inform students about ability to cancel enrolment
  • implement an ACL compliance program
  • not engage in conduct of concern in future
16 May 2016
SensaSlim

(and director and officers)

SensaSlim oral spray solution said to cause weightless and be the subject of a ‘large worldwide clinical trial’.

SensaSlim also failed to disclose key information about its officers involvement in SensaSlim and made certain claims about the franchises’ earning potential

  • misleading and deceptive conduct
  • false representations
  • $3.55 million penalty against SensaSlim
  •  $660,000 penalty against Peter Foster
  • disqualification orders including Mr Foster’s permanent disqualification from managing corporations
  • life-time bans from the weight loss industry and from franchises where Mr Foster’s identity and nature of involvement have not been disclosed
  • 75,000 penalty and disqualification order against SensaSlim officer Michael Boyle
  • $55,000 penalty and disqualification order against SensaSlim officer Peter O’Brien
12 May 2016
FDRA

(and director Jackson Anni)

Selling electronic tablets and extras in Indigenous communities at the Royal Darwin Hospital and associated hostels Alleged:

  • unconscionable conduct
  • misleading and deceptive conduct
  • unsolicited selling provision breaches
Undertaking (without admission) to:

  • provide $20,000 redress
  • not enter indigenous communities to sell goods or services for 5 years;
  •  only sell tablets to consumers that approach FDRA first and provide a cooling-off period
  • have written agreements with every customer
6 May 2016
Kingdom Groups International “Truly Australian made” sheepskin footwear (made in China)
  • alleged false and misleading representations
  • $10,800 infringement notice
3 May 2016
The Community Network (Multimedia International Services Pty Ltd) Terms of digital advertising contracts
  • unconscionable conduct
  • false or misleading representations
  • $230,000 penalty
  • undertaking to amend standard form contracts
  • declarations, costs
  • implement an ACL compliance program
2 May 2016
TOTAL: 15 businesses   12 breaches found; 13 alleged breaches $9,192,400 in penalties, infringement notices and undertakings issued  

 

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About The Author

Jessica Waters is a Senior Associate in the Competition Law and Regulatory Group at King & Wood Mallesons where she advises on a range of competition and regulatory issues. Jessica is also an ad hoc sports journalist and her travels have led her to practice competition and EU law in London and Brussels, with fleeting stints in Canada and the USA.

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