An online retailer of iconic ugg boots has been penalised for $430,000 by the Federal Court after falsely and misleadingly claiming that the boots it sold were made in Australia. The case of Australian Competition & Consumer Commission v Marksun Australia Pty Ltd1 serves to highlight the importance of ensuring any claims about the origin of a product are accurate and the potential consequences of making false and misleading claims.
The false and misleading “Australian made” claims
Marksun, an online trader of ugg boots, made false and misleading claims regarding its products on eleven websites, several of which were linked to URLs containing the word "Australia". Marksun had claimed that its ugg boots were made in Australia when in fact the boots were made in China. It did this by promoting its boots under the trade mark MARKSUN PRODUCTS UGG BOOTS FROM AUSTRALIA and via statements such as "Made in Australia from Australia[n] Wool" and "100% Authentic Australian made". In addition, Marksun's websites contained images of Australian animals, the Australian flag as well as the Sydney Opera House. Two websites even featured the green and gold Australian Made kangaroo logo2 without the authority of Australian Made Campaign Limited (which regulates use of the logo).
The ACCC’s action in the Federal Court
Prior to issuing proceedings, ACCC contacted Marksun regarding its offending conduct. Despite receiving assurances that it would discontinue such conduct, the false and misleading Australian made claims continued, and indeed worsened, resulting in the ACCC initiating the Federal Court action in which Marksun was penalised $430,000.
In his default judgment, Justice Gilmour described the conduct of Marksun as "calculated to apply a veneer of 'Australian-ness' or 'Australia washing'"3, noting that “the respondent ha[d] deliberately structured its marketing to benefit from the perception of an iconic Australian product being "Made in Australia", when it is actually made in China." 4
In assessing the application for pecuniary penalties, the Court considered (among other things) the flagrancy of the breaches, the effect on the reputation of the Australian Made logo and the need for deterrence (of repeat conduct by the respondent but also generally to others).
False place of origin claims made online
False place of origin claims are particularly damaging in the online context. As recognized by Justice Gilmour "there may be less, or at least less immediately familiar opportunities for consumers to test or enquire about representations made about products on websites."5 Marksun exploited this feature of the online marketplace to obtain an unfair market advantage to the detriment of not only the buyers of its goods, but also the credibility and value of Australian made claims more generally: "consumers may become wary of whether other products which have the Australian Made Logo have been similarly misused. Consumers may begin to question the value of the Australian Made Logo and the concept of "Australian made" if false representations are easily made on the internet".6 Eroding consumer confidence in Australian made claims ultimately disadvantages those businesses which legitimately make the same claims.
Penalties ordered against Marksun
In addition to $430,000 in pecuniary penalties, Marksun was ordered to cease from engaging in similar conduct, pay ACCC's legal costs and publish on each of its websites a correcting advertisement which included the orders of the Court.7
Consumers place a premium on goods made in Australia and ACCC v Marksun illustrates the value of Australian made claims and the importance of ensuring such claims are not misused. This is especially the case in the online context where websites are accessible by consumers around the world who are unlikely to make any further enquiries into the origin of goods promoted online.