Businesses must be honest in the claims they make about their products, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, has warned.
He was commenting on Federal Court orders, made by consent, against Phoneflasher.com Pty Ltd, its former director, Ms Jimeale Jorgensen, and its majority shareholder and agent, Mr Alan Jorgensen, about false and misleading representations about the Phoneflasher mobile phone accessory.
"Phoneflasher.com supplied Phoneflashers to various retailers throughout Australia with claims that they reduced radiation and therefore had associated health benefits", Mr Samuel said.
"The claims were on the packaging and displays, in promotional material and on the Phoneflasher.com website.
"The ACCC alleged that the representations were false and misleading in breach of section 52 and 53(c) of the Trade Practices Act 1974 because the product does not work as claimed and Phoneflasher.com has no reasonable basis for making the claims. Under section 51A of the Act if a company makes a representation as to a future matter it must have a reasonable basis for making the claims".
With the consent of the parties, the Federal Court made the following declarations and orders:
- declared that Phoneflasher.com had:
- engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of section 52 of the Act; and
- made false or misleading representations that the Phoneflasher had performance characteristics that it did not have contrary to section 53(c) of the Act.
- granted a three year injunction restraining Phoneflasher.com and Mr Alan Jorgensen and Ms Jimeale Jorgensen from making representations that the Phoneflasher:
- reduces radiation
- provides health benefits for the user of the telephone, or
- prevents short-term memory deterioration by absorbing electromagnetic radiation
- where the Phoneflasher does not reduce radiation.
- ordered that Phoneflasher.com write to each retail outlet it supplied with the Phoneflashers to advise them of the Federal Court's orders and requesting that they display a consumer notice in a prominent location near where the Phoneflasher is displayed for sale.
- place a similar notice on the Internet website, http:/www.phoneflasher.com, and any other website being used by Phoneflasher.com to promote the Phoneflasher, in the form of an automatically generated active pop-up window or message box for a period of six months.
- pay the ACCC's costs of $20,000.
The court also declared that Mr Alan Jorgensen and Ms Jimeale Jorgensen were knowingly concerned in the conduct.
"Consumers often rely on the claims made by businesses about the efficacy of their products; business must, in turn, be honest", Mr Samuel said. "The ACCC will not allow business to mislead consumers on matters potentially affecting their health".