On the 23rd of July 2021, the Federal Court ordered Lorna Jane Pty Ltd to pay $5 million in fines for making false and misleading claims to consumers in relation to its “LJ Shield Activewear” line of products. The company admitted that in July of 2020, it falsely represented that the activewear “stopped the spread” and “protected wearers” against viruses including COVID-19. This article discusses the lesson learnt from this Federal Court proceeding and how the law surrounding misleading and deceptive conduct protects consumers.

What is Misleading or Deceptive Conduct?

Misleading or deceptive conduct is regulated under the Australian Consumer Law which provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. ‘Trade or commerce’ is interpreted by its ordinary meaning and extends to anyone providing or acquiring goods and services. Therefore, it is important for business owners to be aware of their obligations. For conduct to be considered ‘misleading or deceptive’ there must be a real possibility that the alleged conduct will mislead a consumer into thinking that the false claim was, in fact, true. This may include:

• False advertising about a company’s or its competitors’ products;
• Small print and disclaimers hiding important information from consumers;
• Bait advertising and special offers which misrepresent products or prices;
• Pricing errors where products are advertised at incorrect prices; or
• Silence and withholding important information.

However, even if a consumer discovers the truth before the conclusion of a transaction, the company can still be found to have engaged in misleading and deceptive conduct as the consumer has been enticed into ‘the marketing web’. Misleading or deceptive conduct claims can be brought by individual claimants who have relied upon this conduct to their detriment, or by the Australian Competition & Consumer Commission (ACCC) as part of their regulatory function.

The Case of Lorna Jane

The marketing campaign for the Lorna Jane “Shield Activewear” included claims that the product incorporated ground-breaking technology that made the transferal of pathogens onto the fabric impossible, thereby eliminating viruses upon contact with the fabric. These misrepresentations were made both in store and on the company’s social media platforms. Representatives from the company admitted that there was no scientific basis for their claims. The Federal Court emphasised the severity of the company’s conduct, characterising it as ‘exploitative, predatory and potentially dangerous’. Along with the $5 million in penalties, the Court also ordered that Lorna Jane be restrained from making any ‘anti-virus’ claims about their products, must publish corrective notices across their media platforms and establish a consumer law compliance program.

How Etheringtons Solicitors can help

This case is a timely reminder that the ACCC will continue to prioritise consumer protections in the midst of the pandemic and hold companies accountable for their advertising practices. It is important for companies to be fully aware of their obligations particularly during this rapidly changing environment. If you would like more information on how we can assist you, do not hesitate to contact us on 9963 9800 or via our contact form.