The Federal Court has declared Kmart contravened the Trade Practices Act in supplying Elmo shaped bean bag covers without the required warning label:
"WARNING: Small Lightweight Beads Present a Severe Danger to Children if Swallowed or Inhaled."
The warning label is required under a prescribed consumer product safety standard.
The Australian Competition and Consumer Commission took court action after a routine survey of bean bags identified the non-compliant Elmo bean bag covers in Kmart stores across Australia prior to Christmas.
"The ACCC was concerned this breach represented a very high risk to consumers due to the significant inhalation hazard of bean bag beads and low consumer awareness of the danger which was compounded by the absence of the warning label," ACCC Acting Chair, Ms Louise Sylvan, said.
"This was a product marketed at children, the very consumers the product safety standard is intended to protect.
"Polystyrene beads are hazardous as they have a magnetic quality and readily clump together. They also cling to internal mucous membranes presenting a severe ingestion/inhalation hazard and are not revealed by x-rays.
"Children in the 0-4 years range are at most risk of serious injury. In the past, ingestion of bean bag beads has caused deaths in Australia and overseas.
"Retailers are on notice that they must ensure that the products they sell to the public comply with mandatory product safety standards."
The court also ordered a review and upgrade of the product safety elements of Kmart's trade practices compliance program and the appointment of an independent person to advise and assist Kmart in conducting a Trade Practices risk assessment.
The outcomes of this review and upgrade of Kmart's compliance program will be reported to the ACCC.
Kmart was also ordered to pay a contribution to the ACCC's court costs of $4,000.
In conjunction with its supplier, Kmart recalled the product. Following the commencement of proceedings by the ACCC Kmart placed a warning notice on its website in relation to the hazard posed by bean bag beads and subsequently Kmart consented to the court orders.
The ACCC's proceedings against Kmart utilised the Fast Track List in the Victorian Registry of the Federal Court. The matter was filed on 5 December 2007 and concluded on 30 January 2008.
Ms Sylvan said it is pleasing that court action in matters of product safety can be concluded in a relatively short period.
"Consumers are encouraged to return any Elmo bean bag covers without the warning label to Kmart."