A decision by the Federal Court in Sydney today against Giraffe World serves as a warning to promoters of health products to be careful about claims of health benefits the product will deliver and the method of marketing such products.
The Australian Competition and Consumer Commission instituted Federal court proceedings against Giraffe World Australia Pty Ltd in May 1998 alleging the company had fallen foul of the consumer protection provisions of the Trade Practices Act 1974 by making misleading representations about how their health product - the 'negative ion' mat - worked and the health benefits it produced. The ACCC also alleged that Giraffe World contravened the referral selling and pyramid selling provisions of that Act.
Justice Lindgren found that Giraffe World had engaged in misleading and deceptive conduct in breach of the Trade Practices Act 1974. He also found that Giraffe World promoted a promoted a pyramid selling scheme and engaged in referral selling.
Justice Lindgren in his summary of the case said:
'Giraffe World sought to portray the case as a battleground between conventional and alternative health care systems, and between the approaches of modern Western science and medicine on one hand and an older Oriental approach to human health and wellbeing on the other'.
Giraffe World did not lead any medical or other expert evidence to support the evidence of users of the Mat that their health had improved. Justice Lindgren found that:
- the mat did not emit negative ions or generate them within the body of a person lying on the mat;
- there was no scientific support for the proposition that the Mat by means of negative ions, produced and would produce benefits for human health; and
- Giraffe World misrepresented that various bodies supported its claims that the mat offered the health benefits claimed for it.
Justice Lindgren also found that Mr Jack Misuma, a director of Giraffe World and other companies which were beneficiaries of large sums of money paid by Giraffe World, and Mr Robin Hahn, president of Giraffe World, had contravened both the referral selling and pyramid selling provisions of the Act. Justice Lindgren said that it seemed clear that Mr Misuma made a sizeable amount of money from the pyramid and referral selling scheme.
The proceeding is to be stood over until 31 August 1999 for the making of declarations and orders.