We recently had an interesting request from one of our clients. We had been helping this client set up an online business that sells Australian-made food products to customers in Australia. The client then told us it wanted to diversify its product offering – it also wanted to sell sunscreen and other cosmetic products. The client asked us what rules and regulations it should be aware of.
We have worked for many businesses – from web designers to ice-cream vendors. But we had not yet helped a business to sell cosmetics. We were intrigued, so decided to look deeper.
What are cosmetics?
Various legislative regimes apply to the supply of cosmetic products in Australia, including the general consumer protections in the Australian Consumer Law (ACL).
Ingredients used in industrial chemicals are regulated by the Industrial Chemicals (Notification and Assessment) Act 1989. This Act establishes the National Industrial Chemicals Notification and Assessment Scheme (NICNAS), which is administered by the Department of Health.
For the purpose of NICNAS, a cosmetic is a substance or preparation that is placed in contact with the human body for a specified purpose, such as cleaning or changing the smell or appearance of the body. Even products that are described as “natural” may be cosmetics regulated by NICNAS.
What are the main obligations?
Some obligations only apply to businesses that introduce cosmetics into Australia – which means manufacturers and importers. These businesses must register with NICNAS and ensure that all ingredients in their cosmetic products are either listed on the Australian Inventory of Chemical Substances or notified for assessment.
These obligations generally do not extend to retailers of cosmetic products manufactured in Australia. However, retailers must comply with the labelling and other requirements for cosmetics.
What are the labelling requirements?
The principal labelling requirements for cosmetics are contained in the Trade Practices (Consumer Product Information Standards) (Cosmetics) Regulations 1991 (the Information Standards), which are administered by the Australian Competition and Consumer Commission (ACCC).
The Information Standards do not apply to:
- goods manufactured in Australia for export;
- therapeutic goods; and
- free samples
The main requirement of the Information Standards is that all ingredients must be disclosed. In general, the ingredients in a cosmetic product must be listed:
- on the container of the product; or
- if the product is not in a container, on the product itself.
If neither of the above options is possible because of the size, shape or nature of the cosmetic product, the ingredients must be shown in another way that ensures that a consumer can be informed about the ingredients.
In addition to the Information Standards, the Cosmetics Standard 2007 applies to specified types of cosmetic products, including some sunscreen, anti-acne, oral care and anti-dandruff products.
Are there any penalties?
Failure to comply with the Information Standards is an offence and the maximum fines are $1.1 million for companies and $220,000 for individuals. Products may also be recalled if they do not comply with the Information Standards.
In addition, suppliers of cosmetic products have mandatory reporting obligations under the ACL. A supplier must notify the Commonwealth Minister within two days of becoming aware that the death, serious injury or illness of a person may have been associated with a product supplied by the supplier. The maximum fines for failing to comply with the mandatory reporting obligations are $16,650 for companies and $3,330 for individuals.
Conclusion
If you need further information about the rules for selling cosmetics – or you have another novel legal issue you would like us to look into – give LegalVision a call on 1300 544 755.