Misleading and Deceptive Activewear

On 21 December 2020, the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Lorna Jane Pty Ltd ACN 065 384 616 (Lorna Jane) and Ms Lorna Jane Clarkson. The ACCC alleged that those two entities had engaged in misleading and deceptive conduct, made false or misleading representations, and engaged in conduct that was liable to mislead the public.

Between 2 July 2020 and 23 July 2020, Lorna Jane made a number of representations in its stores, marketing materials, and social media regarding a line of products promoted as ‘Anti-Virus Activewear’ which had been treated with a substance dubbed ‘LJ Shield’. These representations include, amongst other things:

• “LJ Shield – Protecting you with ANTI-VIRUS ACTIVEWEAR“;
• “Infectious diseases like COVID-19 and bacteria can remain on hard surfaces for up to 96 hours, but with our new fabric treatment, LJ SHIELD, they cannot be transferred to your Activewear“;
• “it [LJ Shield] is anti-viral, anti-bacterial, anti-mould, anti-fungus“;
• Describing LJ Shield as a “technology’, “revolutionary” and “not a gimmick“; and
• “With Lorna Jane Shield on our garments it meant that we were completely eliminating the possibility of spreading any deadly viruses“;

What is Misleading and Deceptive Conduct?

Under section 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth), known as the Australian Consumer Law (ACL), a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Whether conduct is misleading or deceptive must be considered by reference to a hypothetical individual who would have been a member of the class of consumer affected by the conduct. The question of whether particular conduct is misleading or deceptive is a question of fact to be answered in the context of the relevant surrounding facts and circumstances.

If a person has acted in reliance on someone’s misleading and deceptive conduct and suffered damages as a result, they are able to recover these damages from the representor under section 236 of the ACL. Additionally, the ACCC as regulator may seek that a person who engaged in misleading and deceptive conduct pay a pecuniary penalty pursuant to section 224 of the ACL.

Outcome

Lorna Jane and Ms Clarkson cooperated with the ACCC and made admissions regarding the allegations. The Federal Court of Australia handed down its decision on 23 July 2021, finding that Lorna Jane had engaged in misleading and deceptive conduct, and otherwise made false or misleading representations and engaged in conduct liable to mislead the public, by making the Representations. The Court ordered, by consent, that:

1. The proceedings against Ms Clarkson be dismissed;
2. Lorna Jane pay pecuniary penalties to the Commonwealth of Australia totalling $5,000,000;
3. Lorna Jane be restrained from using the words “anti-virus” in relation to their marketing materials for a period of three years;
4. Lorna Jane publish a corrective notice with respect to the Representations; and
5. Lorna Jane establish a program for the purpose of ensuring compliance with the ACL.

If you have any questions or concerns please contact Chamberlains and talk to our litigation & dispute resolution team today.