Lorna Jane was recently ordered to pay $5M over false and misleading conduct and representations.
The activewear giant admitted that it falsely represented to consumers that its LJ Shield Activewear could eliminate or protect wearers from viruses including COVID-19.
In addition to the penalties, Lorna Jane is restrained, for a period of 3 years, from making ‘anti-virus’ claims unless it has a reasonable basis for doing so and must publish a corrective notice.
What is a false and misleading conduct?
The Australian Consumer Law (“ACL”) prohibits businesses from making statements in trade of commerce that:
- Are misleading or deceptive; or
- Are likely to mislead or deceive.
When examining a statement, the court will look at whether the overall impression created by the conduct is false or inaccurate.
What is a false or misleading statement?
In addition, the ACL prohibits a business from making false or misleading representations about goods or services when supplying, offering to supply, or promoting those goods or services.
What could be false or misleading?
Statements that could be false or misleading may concern:
- A particular standard, quality, value, or style;
- Previous use;
- That a particular person has agreed to acquire goods or services
- The availability of facilities for the repair of goods or of spare parts for goods
- Where the good come from;
- Whether the goods or services have sponsorship, approval, performance characteristics, uses or benefits
- Discounts; and/or
But I didn’t expect them to believe we made the best coffee in the world?
The Court has found that ‘puffery’ is not mislead. A statement will be puffery when it so over the top that no reasonable person would be misled by it.
What if I just don’t tell them everything?
Silence has been found to be misleading when a business fails to disclose relevant facts. For example, the Court held that by failing to disclose that a seller was selling their restaurant due to a similar restaurant opening up in the area, the seller had engaged in misleading conduct.
What should I do if I am concerned about false and misleading representations?
The Australian Competition and Consumer Commission investigates complaints of false or misleading claim.
Get in touch with Stephanie Forward. Stephanie is a senior associate in our litigation team and has prosecuted and defended many claims of false and misleading conduct.