Does your business sell products that claim to have ‘health benefits’? 

As a business owner, it is super important that you are aware of the legals involved with claiming your product has health benefits.  

In 2020, the Australian Competition and Consumer Commission took Lorna Jane to court for misleading the public by advertising that their products were ‘anti-COVID.’ 

Misleading and deceptive conduct is prohibited by law. 

As a business owner, it is your responsibility to ensure to avoid misleading and deceptive claims in relation to your products. 

Understanding what you legally can and cannot do when claiming that your business’s products have health benefits is important. 

What Is Misleading and Deceptive Conduct? 

In accordance with s 18 of the Australian Consumer Law (ACL), misleading and deceptive conduct is prohibited. 

Misleading and deceptive conduct is when a consumer is misled or deceived into believing that a good or service provides something greater than it actually does. 

To see whether a statement or product is misleading, the ACCC considers whether the consumer was given an overall misleading impression that the product or service claimed to do something that it doesn’t.

For example, in late 2020, the ACCC took Lorna Jane to court over claims that their active-wear products were anti-COVID. 

Lorna Jane claimed that the LJ Shield activewear was ‘anti-bacterial’ with the ability to break down bacteria and avoid it from multiplying. 

The ACCC stated that the statements made by the famous activewear brand gave off the impression that the activewear could combat COVID-19. This in nature was misleading.  

Another example includes the Power Balance Case. Power Balance claimed that their wristband product improved strength, flexibility and balance. The ACCC investigated and concluded that there was no scientific evidence to back Power Balances claims. 

As such, the product and statements regarding it were deemed misleading and deceptive.  

What Are The Consequences Of Making False Statements About Your Product?

Engaging in misleading and deceptive conduct can engage serious consequences. 

These consequences can harm your business’s reputation, finances and overall potential. 

For instance, in the Power Balance Case, the business was obliged to offer refunds to all customers, remove misleading information from all accessible points of information and not ever make statements that are not supported by independent testing again. 

In more serious circumstances, your business may be disqualified from operating or a director may be personally liable for having actual knowledge of the misleading and deceptive conduct.

For example, an allergy treatment company claimed that it could cure individual’s allergies through their product.

The ACCC revealed that the product was unable to provide such benefits. Consequently, the ACCC took Allergy Pathway to the Federal Court. 

The case presented that one of the company’s directors was knowingly involved in the misleading and deceptive conduct. Consequently, the Court ordered that both Allergy Pathway and its director personally entered into an agreement to not engage in said conduct again as well as pay costs. 

Fines can be up to $650,000 for an individual and $10 million for a corporation for engaging in misleading and deceptive conduct. 

It is clear that engaging in misleading and deceptive conduct can lead to grave consequences. It is vital that you understand ways you can actively avoid stating that your product has health benefits when it may not. 

Let’s break it down. 

Tips To Consider If Claiming Your Product Has Health Benefits 

As a business owner you must consider the above and understand what misleading and deceptive conduct is to actively avoid it and its consequences. 

When considering how to market a product, you should also consider the below. 

1. Has The Health Benefit You Are Claiming Been Scientifically Proven? 

To claim that a product has health benefits requires fact. 

What we know from the law and previous cases is that the overall consideration you must have is: 

  • Does this product actually do what I say it does and can this be proven?

Therefore, if your product is claiming to increase strength, balance and flexibility, you must be able to provide evidence for this. 

If you are not able to, then you will likely end up facing the same consequences Power Balance did. 

A good starting point would be to contact the relevant authorities or specialists in the health area you are claiming to provide benefit. 

The ACCC specifically recommends independent testing to avoid any biased outcomes. 

If your product has not undergone proper evidence testing to back your claim that it provides health benefits, then it is likely that you could face misleading and deceptive conduct ramifications. 

Gaining scientific and independent authority to state that your product in fact does provide health benefits is an absolute must to avoid engaging in misleading and deceptive conduct. 

2. An Impression Is All It Takes 

Even if your product does not directly state it provides health benefits, it may still be considered misleading and deceptive. 

Just by giving the overall impression that your product provides health benefits can amount to misleading and deceptive conduct. 

As such, if your product is marketed as ‘anti-COVID’, it gives the impression that they will not contract COVID-19 if they purchase the product. It doesn’t matter if you’re not explicitly claiming the product protects you from contracting COVID-19. 

Words and context matter a lot! 

3. Think Like A Consumer

As a business owner, it is your responsibility to consider all of the possible impressions that can be given off by your marketing. 

Think like a consumer. 

Consumers have a significant amount of trust and dependence on businesses. Due to this faith, it’s very possible to be led to believe a product provides health benefits. This is something you should always keep in mind when considering if you may be engaging in misleading and deceptive conduct. 

An example of this is Nurofen’s misleading claims for specific pain management. Nurofen claimed that specific tablets provided specific relief for pain relating to period pain, back pain, migraine pain and tension headaches. Price points for these pills would be higher as they supposedly targeted specific types of pain.

The Court found that the specific products contained the exact same ingredients as general Nurofen. This case particularly evidences the trust and dependence consumers have on well known products. Impressions that products provide health benefits are extremely easy to make. 

As such, vigilance is a must when claiming that your product provides health benefits. Think like a consumer. 

Need More Help? 

Consumers have a significant amount of trust in businesses, especially when it comes to products that claim they have health benefits. 

It is vital to your business and it’s reputation that you refrain from engaging in misleading and deceptive conduct when it comes to advertising your goods or services. 

All it takes is an impression that your business’s product leads to health benefits when it doesn’t for your business to face misleading and deceptive conduct consequences. 

If you are concerned about how your business is advertising its products, reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617.

About Sprintlaw

Sprintlaw is a new type of law firm that operates completely online and on a fixed-fee basis. We’re on a mission to make quality legal services faster, simpler and more affordable for small business owners and entrepreneurs.

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