The Federal Court of Australia has issued a scathing judgment against Australian alternative health promoter Belle Gibson, holding that she "deliberately played on" the charitable nature of the Australian community and engaged in misleading and deceptive conduct and unconscionable conduct in the course of promoting of her smart phone applications and book, "The Whole Pantry" by falsely claiming that she suffered from brain cancer. Ms Gibson attracted headlines in the Australian media when reports that her cancer claims were false surfaced in 2015. Her smart phone applications and book were subsequently withdrawn from sale.

Belle Gibson and The Whole Pantry

In 2013, Ms Gibson and her company started promoting wellness smart phone applications and a book called "The Whole Pantry", claiming that she suffered from brain cancer and had rejected conventional treatments in favour of healing herself naturally through the nutrition and alternative therapies outlined in her book.

The Director of Consumer Affairs alleged that Ms Gibson's claims about her poor health and subsequent recovery were false. Ms Gibson promoted herself and her business by these claims and claimed that the proceeds of sales of the apps and book would be donated to various charities. The Director alleged that many of those donations were not made.

Despite the seriousness of the allegations made against her, Ms Gibson did not participate in the Federal Court proceeding.

Were Belle Gibson's claims false?

The Australian Consumer Law (ACL) prohibits persons and companies engaging in misleading and deceptive conduct and unconscionable conduct in relation to goods or services and making false or misleading representations about goods and services, including in testimonials.

Justice Mortimer held that Ms Gibson had engaged in misleading and deceptive conduct and unconscionable conduct in the course of the promotion of the smart phone apps and the book. However, her Honour declined to find that Ms Gibson had made false or misleading representations in the testimonials she provided to promote her products.

Specifically, her Honour found that:

  • Ms Gibson and her company engaged in misleading and deceptive conduct in contravention of section 18 of the ACL. In doing so, her Honour held Ms Gibson's claim that she had been living with brain cancer since 2009 and continued to do so, was false and that she had no reasonable (or rational) basis to believe she had cancer from the time she made her claims public to promote "The Whole Pantry" book and apps.
  • Both Ms Gibson and her company were liable for that conduct, despite the fact that it was the company, not Ms Gibson, that was contracted to publish the book and apps and that operated the Facebook and Instagram accounts.
  • Ms Gibson and the company falsely claimed that proceeds from sales of the book and apps were donated to various charities.

In respect of unconscionable conduct under section 21, her Honour was satisfied that by securing the public profile and personal and financial benefits for herself and her company by falsely claiming to donate the proceeds of sales to charities, Ms Gibson had acted unconscionably. However, in respect of the false cancer claims, the law requires the Court to be satisfied that Ms Gibson had acted unconscionably by making claims that she had cancer which she knew to be false. Her Honour was not satisfied that Ms Gibson did not believe that she had brain cancer, even if that belief was not rational.

The Director was unsuccessful in his claims under section 29 of the ACL that Ms Gibson and her company made false or misleading claims in the form of a testimonial relating to the specific performance characteristics and benefits of the book and smart phone applications. Her Honour held these allegations were not made out, as the Director did not provide any evidence to prove whether or not the strategies endorsed by Ms Gibson in her apps and book were effective in curing cancer or improving health.

Injunctions and declarations ordered by the Court

On 7 April 2017, Justice Mortimer:

  • made formal declarations that Ms Gibson and her company had contravened s 18 and 21 of the ACL in respect of the charitable giving claims, and s 18 of the ACL in respect of her false cancer claims.
  • granted an injunction prohibiting Ms Gibson from making her false claims about having cancer, and from providing health and wellbeing advice.
  • ordered Ms Gibson to pay a contribution of the Director's legal costs.

What next?

A hearing and determination on pecuniary penalties and an adverse publicity notice is yet to be conducted, but misconduct of this nature can attract severe penalties. For example, the maximum statutory penalty under the ACL for misleading and deceptive conduct and unconscionable conduct is $1.1 million for a company and $220,000 for an individual.

Important points to take away from this case are:

  • In some circumstances a Court may be willing to "look behind" a company to hold a director personally liable for misconduct.
  • Businesses should scrutinise marketing material to ensure that any claims made about products or services and their performance are accurate.
  • If testimonials are used to promote products or services, these need to be correct and based on the experiences and beliefs of the person making the claim.
  • Businesses who claim that proceeds from sales are given to charity need to ensure that the money is donated accordingly.