Lorna Jane claimed its activewear could stop the spread of COVID-19 after it was treated with a spray described as “LJ Shield”. Lorna Jane's marketing campaign was essentially founded on combatting consumer fears of the global pandemic and was labelled as ‘exploitative, predatory and potentially dangerous' in the Federal Court's ruling.
The Australian Competition and Consumer Commission (ACCC) successfully alleged Lorna Jane contravened sections 18, 29(1)(g) and 33 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) in making false representations about the characteristics of the activewear.
Context
The Australian Consumer Law (ACL) prohibits businesses from making statements in trade or commerce that are ‘misleading or deceptive' or ‘likely to mislead or deceive'. Businesses must not make false or misleading claims about the ‘quality, value, price, age or benefits of goods or services or any associated guarantee or warranty'. The overall impression created by the business' assertions is considered by the courts when assessing whether conduct is likely to mislead or deceive.
Importantly, businesses cannot rely on fine print and disclaimers to avoid liability for an overall misleading or deceptive message. Mere puffery is used throughout different advertising campaigns and is not considered misleading. Puffery describes ‘wildly exaggerated or vague claims' about products or services that could not possibly be taken seriously. For example, a café might claim it has “the best cake in the world” and that statement would not be considered misleading under the ACL.
The Lorna Jane case
The Therapeutic Goods Administration (TGA) issued three infringement notices totalling almost $40,000 to Lorna Jane for alleged unlawful advertising relating to COVID-19. The TGA alleged Lorna Jane represented its LJ Shield Activewear for ‘therapeutic use' and therefore as therapeutic goods within the meaning of the Therapeutic Goods Act 1989 (TG Act). This required the goods and their advertising to be subject to the regulations administered by the TGA.
For advertising of therapeutic goods to be lawful in Australia, the goods must be included on the Australian Register of Therapeutic Goods (ARTG). Any reference to COVID-19 in promotional material is a ‘restricted representation' within the TG Act as it refers to a serious form of disease, condition, ailment or defect.
Claims and admissions
Lorna Jane admitted between 2 and 23 July 2020 it falsely represented to consumers that its LJ Shield Activewear eliminated or provided protection from COVID-19 with advertising stating:
“Cure for the Spread of COVID-19? Lorna Jane Thinks So” and “LJ SHIELD is a groundbreaking technology that makes transferal of all pathogens to your Activewear (and let's face it, the one we're all thinking about is Covid-19) impossible by eliminating the virus on contact with the fabric”.
Lorna Jane falsely represented to consumers that ‘LJ Shield Activewear' was backed by scientific or technological information supporting their ‘anti-virus' claims. The company went on to admit there were no scientific testing results showing the effectiveness of the activewear on viruses and no evidence of truth to the representations.
Lorna Jane's personal involvement in the approval of such promotional material, marketing campaigns, false statements made by her on Instagram and statements contained in media releases were labelled as ‘dreadful' by the Judge.
Outcome
Lorna Jane was ordered to publish corrective notices across the advertising channels previously used and to refrain for a period of three years from making any anti-virus claims unless they have a reasonable basis. The company was also required to establish a consumer law compliance program and pay the ACCC's legal costs.
Lorna Jane cooperated with the ACCC and agreed to certain court orders, including to pay a penalty of $5,000,000.
Key takeaways
It is imperative that any representation regarding goods or services in trade or commerce, particularly in business development material, is substantiated by fact, including where appropriate scientific research. Businesses need to be aware of their obligation not to make false, misleading or deceptive claims about their products or services.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
