Even before the arrival of COVID-19 the wellness industry had become an established part of the mainstream, but with the pandemic firmly placing health and wellness at the forefront of consumers’ minds, brands must exercise caution when racing to meet demand. With regulators, including the Australian Competition and Consumer Commission (ACCC) and the Therapeutic Goods Administration (TGA), actively enforcing laws that protect consumers from products and product claims that might cause harm during this period of heightened vulnerability, in this post we canvass some of the key considerations for retailers looking to promote the health benefits of their wares.
The Australian Consumer Law (ACL)
The ACL prohibits, among other things, conduct that is misleading or deceptive, or which is likely to mislead or deceive. Products that make health or wellness claims may risk falling foul of the ACL, particularly where the conduct includes:
- Unsubstantiated “credence” claims – “Credence” (or premium) claims are claims consumers cannot independently verify and therefore rely upon the word of the seller. Because the perceived desirable attributes of a product are heightened by these kinds of claims, they can effect pricing as well as a consumer’s decision to purchase. Health claims are a kind of credence claim which the ACCC closely monitors, because they can be highly influential over the minds of consumers whose wellbeing and safety may be put at risk.
- Misleading “jargon” – Retailers need to balance the desire to creatively market products with the need for accuracy. While “puffery” in advertising is tolerated to a certain extent, the marketing of health and wellness products may be considered misleading or deceptive (or even false) where the promotional materials use jargon which on its face appears to be technical, but is in fact meaningless.
Health and wellness products may also be subject to the therapeutic goods regulatory regime where certain representations as to their uses are made:
- Therapeutic use representations – It is important for retailers to appreciate that in most cases, products that are represented to be for a “therapeutic use” (meaning that the product can be used to prevent, diagnose, cure or alleviate a medical condition) will be regulated as a “therapeutic good” under the Therapeutic Goods Act 1989 regardless of the advertiser’s intention. Therapeutic goods are subject to strict advertising restrictions contained in the Therapeutic Goods Advertising Code including ensuring that claims are valid, accurate and substantiated, and that they are not marketed to children.
- Restricted representations – Throughout the pandemic, the TGA has taken enforcement action highlighting the need to avoid making claims that a product can prevent, kill or cure COVID-19. Such claims are highly regulated and are in fact “restricted representations” under the Therapeutic Goods Act which are unlawful to make without prior formal approval or permission from the TGA. As such, these claims are very likely to attract the attention of the regulator, who has a range of enforcement tools at its disposal, including the ability to issue substantial penalties.
Food Standards Code (FSC)
In the case that products are intended or offered for human consumption they may also be subject to the FSC, which provides for labelling and safety requirements of food products and sets out specific obligations that apply depending on whether a health claim is categorised as a general or high level claim. You can read more about compliance with the FSC in our previous post: Food Standards Code: Claims in Food Advertising and Marketing.
Retailers that offer products with health or wellness attributes should ensure:
- marketing and product packaging materials provide customers with clear and factual information about the product, and highlight any notable limitations, so as to avoid misleading consumers about the extent of the product’s capabilities;
- if specific claims are made about the benefits of a product, that these claims are supported by factual, documented evidence (retailers should keep in mind that the ACCC is empowered to require substantiation of product claims);
- that careful consideration is given to the marketing channels by which the product is likely to be best promoted in an accurate and clear manner;
- in circumstances where the product may have a therapeutic use or is intended for human consumption, to seek specific advice about compliance with other legislative regimes such as the Therapeutic Goods Act and the Food Standards Code.
This article was authored by Alexandra Moore (Solicitor), Valiant Warzecha (Solicitor), Jessie Buchan (Senior Associate) and Melinda Upton (Partner and Global Co-Chair, Intellectual Property and Technology).