E-cigarette suppliers and retailers should review their advertising and business practices to ensure they are not breaching Australian Consumer Law (ACL), in light of the proceedings initiated by the Australian Competition and Consumer Commission (ACCC) this week. Two companies are alleged to have made false or misleading representations about the product stating that it does not contain toxic chemicals. This article looks into misleading advertising in light of the ACCC proceeding on e-cigarette advertising.

Don’t You Know That You’re Toxic

From August 2015, two companies made representations on their respective websites that their e-cigarette products did not contain toxic chemicals, carcinogens, nor chemicals found in conventional cigarettes. In a promotional video, text stated that the e-cigarette had “no carcinogens, no tar and no smoke”. However, independent laboratory tests revealed that the products did contain toxic materials such as acrolein, acetaldehyde and acetaldehyde.

The ACCC has identified health claims in advertising as a priority, particularly as consumers are now becoming more health conscious and researching their options online. If found in breach of the Australian Consumer Law, the ACCC is seeking penalties, declarations, injunctions, orders for an Australian Consumer Law compliance program, publication orders and costs. The companies face fines of up to $1.1 million for breaching consumer laws.

Australian Consumer Law

If a business makes a particular scientific or health claim about a product or service, they should have the evidence to back it up. The ACL prohibits conduct that is misleading or deceptive or is likely to mislead or deceive. Numerous cases before the courts have concluded that actual evidence that any consumer might have been misled is not necessary to establish a breach of consumer law. Actual intention to mislead or deceive is not necessary to establish a breach of the ACL, but if the intention is present, a court may be more likely to find that the conduct complained of was misleading. In the e-cigarettes case, the ACCC alleges that the directors of both companies were knowingly concerned in the alleged misleading conduct.

Courts will also look at the class of consumers targeted by the misleading conduct. Here, e-cigarette consumers would be attracted to a product without toxic chemicals. Promoting a product as a healthier alternative and without toxic chemicals is attractive. Clearly, it is likely that an e-cigarette consumer would prefer this product over a toxic e-cigarette.

Smoke and Mirrors

There are a number of factual categories of misleading or deceptive conduct, including comparative advertising and character merchandising. Comparative advertising is where businesses compare their products more favourably than their competitor’s products (e.g. Advil v Nurofen or Coca-Cola and Pepsi).

Meanwhile, character merchandising plays on the emotional attachment the consumer may have the personality or celebrity endorsing the product. Here, there is an association with the product with a certain image, and there is a particular brand perceived as a certain class of product. In both examples, care must be taken to properly characterise the advertising properly to avoid it being misleading or deceptive.

Key Takeaways

If your business is promoting a product based on its health benefits, you must be able to substantiate your claim. Consumers should not be misled about your product and should receive accurate information whether it be an advertisement or in print. LegalVision’s consumer and advertising compliance lawyers can assist you – contact us on 1300 544 755.

Anthony Lieu

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