Whether it was hand sanitiser bottles, face masks or therapeutic goods, there was a ready market for health products after COVID-19 restrictions came into force in March 2020.
In this article, we look at two situations where health products were falsely advertised:
- The prosecution by the Australian Competition & Consumer Commission (ACCC) of Mosaic Brands for infringements of the Australian Consumer Law (ACL) for making false representations as to the composition of hand sanitiser sold in bottles and as to approvals and endorsements of face masks (the ‘Health Essentials Products’); and
- The prosecution by the Therapeutic Goods Administration (TGA) of Peter Evans Chef Pty Ltd for breaches of the Therapeutic Goods Act 1989 (Cth) for advertising unregistered medical devices and medicines (the ‘Therapeutic Goods’).
The Mosaic Brands Health Essentials Products Advertising
From March until June 2020, Mosaic Brands advertised hand sanitiser and face masks through its 1,333 retail stores, on its websites and via direct marketing under its fashion brands: Noni B, Autograph, BeMe, Crossroads, Katies, Millers, Rivers, Rockmans and W. Lane.
Five infringement notices were issued by the ACCC for these representations:
- Air Clean hand sanitiser sold by Mosaic Brands contained 70% alcohol - when this was not the case;
- Miaoyue hand sanitiser sold by Mosaic Brands contained 75% alcohol - when this was not the case;
- Velcare hand sanitiser sold by Mosaic Brands was approved by the World Health Organisation - when this was not the case;
- KN95 Kids Safety Face Mask sold by Mosaic Brands was ‘FDA/CE Certified’ - when this was not the case; and
- Health Essentials Products were advertised on its websites as non-refundable - when in fact consumers have a statutory right to a refund.
According to the ACCC, “Tens of thousands of hand sanitiser and face mask products were sold on Mosaic Brands’ websites”.
The ‘Conduct of Concern’ was:
- As to the Air Clean and Miaoyue hand sanitiser products, they contained far less alcohol than was stated – for Air Clean it was 17%, for Miaoyue it was 58%, in breach of ss 18 & 29(1)(a) of the ACL (particular standard, quality, composition);
- As to the Velcare hand sanitizer, it was not approved by the World Health Organisation as stated (the WHO does not endorse products), in breach of ss 18 & 29(1)(g) of the ACL (sponsorship and approval);
- As to the KN95 Kids Safety Face Mask it was not ‘FDA/CE Certified’ (US Food and Drug Administration / European conformity mark), in breach of ss 18 & 29(1)(g) of the ACL (sponsorship and approval); and
- That Health Essentials Products advertised on its websites were non-refundable, in breach of ss 18 & 29(1)(m) of the ACL (statutory right to a refund under the consumer guarantee remedies).
According to the ACCC: “The products were marketed with phrases such as ‘Be prepared’, ‘Stock up now before it’s gone’, ‘Remain Healthy’ and ‘Stay Safe and Clean’. As well as references to the pandemic such as ‘These are uncertain times and as the COVID-19 situation changes, we will be too’ and ‘It’s important we are all doing our part to protect the most vulnerable.’”
The penalties and undertakings were:
- The penalties payable under the five (5) infringement notices totalled $630,000;
- An undertaking that for three (3) years Mosaic will not make a representation about the composition, attributes, qualities, characteristics, approvals or endorsements of a Health Essentials Product without being tested in an appropriate testing facility, with annual reviews;
- An undertaking that for three (3) years, Mosaic will not communicate to a customer that they are not entitled to a refund (when they are entitled), and to establish a refund scheme in which each customer who purchased Health Essentials Products is identified, is contacted and is given an application for a refund and a notice is placed on the brand websites; and
- An undertaking to implement an ACL Compliance Program Level 4, with the appointment of a Compliance Officer and a Compliance Advisor to carry out a risk assessment and to report, and issue a compliance program which contains: a complaints handling system, whistleblower protection, staff training, adherence to product safety standards, reports to senior management, an annual compliance review and compliance reports, the program to continue indefinitely.
Refer to the ACCC Media Release Mosaic Brands pays $630,000 in penalties over COCID-related ‘health essentials’
Velcare Hand Cleanser was advertised as WHO-approved
The Pete Evans Therapeutic Goods Advertising
In April 2020, the TGA issued two infringement notices to Peter Evans Chef Pty Ltd for alleged breaches of the Therapeutic Goods Act 1989 (Cth) in relation to the ‘BioCharger’ device.
The infringement notices were issued because the goods were not entered on the Australian Register of Therapeutic Goods (ARTG) which as therapeutic goods was a prerequisite before they could be advertised. To enter a product on the ARTG, the product claims must be scientifically verified.
The TGA fined Peter Evans Chef Pty Ltd $25,200 for the breaches. See Pete Evans' company fined for alleged COVID-19 advertising breaches
On 25 May 2021, the TGA issued new infringement notices totaling $79,920 to Peter Evans Chef Pty Ltd for alleged breaches of the Therapeutic Goods Act 1989 (Cth) in relation to the ‘BioCharger’ device, hyperbaric oxygen therapy chambers and two oral medicines because they were advertised without being registered on the ARTG. In addition, the advertising contained statements that implied that the products were endorsed by a health professional, which is contrary to the Therapeutic Goods Advertising Code (No 2) 2018.
See Peter Evans Chef Pty Ltd fined $79,920 for alleged unlawful advertising. The TGA has issued this warning:
“Due to the repeated nature of the alleged advertising breaches, the TGA has also issued a directions notice to Mr Evans and his company, to cease advertising therapeutic goods not entered in the ARTG and to discontinue making various claims about therapeutic products.”
The next step for the TGA is to take court action for an injunction.
Particular care is needed when advertising health products or products with health benefits.
Not only is false advertising actionable under the Australian Consumer Law but also actionable under the Therapeutic Goods Act 1989 (Cth).
Marketing Commentary by Michael Field from EvettField Partners
Truth in Advertising should not be an Oxymoron
Prosecutions by the Australian Competition & Consumer Commission (ACCC) of Mosaic Brands for infringements of the Australian Consumer Law (ACL), and by the Therapeutic Goods Administration (TGA) of Peter Evans Chef Pty Ltd for breaches of the Therapeutic Goods Act 1989 (Cth) should be ringing alarm bells across the boardrooms and marketing departments of Australian businesses. They need to get their house in order when it comes to making product claims, or pay the price in financial penalties and reputational damage as a result of the prosecutions.
Advertisers, marketers and product promoters have been known to embellish their product efficacy claims since commerce began. From 19th century travelling snake oil salesman and quacks made outlandish claims about their contraptions, gadgets, lotions and potions. Modern day celebrities and Instagram influencers peddle their wares for profit.
Endorsements, product claims and associated sponsorship arrangements between branded products and celebrities are not a new feature in the marketing landscape. However, in the integrated, hyper-connected, and omni-channel world of social media influencer and television celebrity crossover, it has created a breeding ground for disinformation and potential commercial exploitation.
And so it is that Pete Evans, who was a My Kitchen Rules judge has made claims in a video that was published online that he used a ‘BioCharger NG’ device most days and claimed it could help with the coronavirus. He described it as a "hybrid subtle energy revitalisation platform" which claims to "optimise and improve potential health, wellness and athletic performance. It's programmed with a thousand different recipes and there's a couple in there for the Wuhan coronavirus," Evans said in the video.
Making false claims about a product’s health benefits during a pandemic when people are scared and looking for answers is reprehensible and is deserving of the full weight of the law and the appropriate penalties.
Product manufacturers and marketers must comply with Australian Consumer Law by only making product claims that are true and can be substantiated with reliable scientific evidence, and properly register their products with the appropriate authorities.