The Full Court of the Federal Court of Australia has, in part, allowed an appeal by the Australian Competition and Consumer Commission against a decision of Justice Rangiah in the Federal Court, which had dismissed certain allegations against Dateline Imports Pty Ltd (Dateline Imports).
The appeal concerned allegations that Dateline Imports had made false or misleading representations when it stated that the hair straightening product, Keratin Complex Smoothing Therapy (Keratin Complex), did not contain formaldehyde, and that it was safe for use by consumers. At first instance, the Court found that these allegations were not established by the ACCC.
The Full Court overturned parts of the trial judge’s decision, and found that Dateline Imports Pty Ltd had contravened s52 of the then Trade Practices Act by not having reasonable grounds in making representations that:
- Keratin Complex did not contain formaldehyde;
- Persons using the product could not be exposed to formaldehyde;
- Keratin Complex was safe for its recommended use;
- Keratin Complex complied with all health and safety regulations in the world; and
- Keratin Complex contained no harmful chemicals.
However, the Full Court also dismissed part of the ACCC’s appeal, finding no appellable error had been demonstrated by the trial judge relating to the consideration of the scientific evidence as to the presence of formaldehyde in the product.
“The ACCC brought these proceedings because it was concerned that consumers and hair salon workers may have been exposed to formaldehyde by using Keratin Complex,” ACCC Commissioner Sarah Court said.
“While the appeal has not been fully allowed, it is pleasing that the Full Court has made some further findings in the ACCC’s favour.”
“Businesses have an obligation to tell consumers the truth about their products, and need to have reasonable grounds to support the truth of those statements, particularly when making claims that a product is free from harmful chemicals. Consumers rely on these representations and do not want to unwittingly expose themselves to unsafe products,” Ms Court said.
The ACCC actively monitors the safety of consumer products and has investigated safety concerns arising from the presence of formaldehyde in consumer products.
Formaldehyde and its use in cosmetics is a regulated substance as set out in the Poisons Standard. In 2010, as part of a national survey of formaldehyde levels in various cosmetics, the ACCC commissioned testing of Keratin Complex. The ACCC alleged that the product contained formaldehyde at concentrations greatly in excess of the level permitted by Australian State and Territory Regulations for products of this type.
In relation to most cosmetics in Australia, the maximum safe limit for formaldehyde content is set through the Standard for the Uniform Scheduling of Medicines and Poisons (Poisons Standard). In 2012, after the ACCC commenced these proceedings, the Poisons Standard was amended to prohibit the sale of products containing more than 0.05% formaldehyde in aqueous solution, including methylene glycol which was the substance identified in testing of Keratin Complex.
Dateline Imports withdrew the product from the market in Australia in November 2010.