Australian active wear business fined AU$5 million for making false and misleading COVID-19 apparel claims

The Australian Federal Court has ordered women’s active wear manufacturer and retailer, Lorna Jane Pty Ltd (Lorna Jane), to pay AU$5 million in penalties for making false and misleading representations to consumers, and engaging in conduct liable to mislead the public, in connection with the promotion and supply of its “LJ Shield Activewear”.

In July 2020, Lorna Jane falsely represented to consumers that its LJ Shield Activewear, which were treated with a ‘LJ Shield’ spray “eliminated”, “stopped the spread” and “protected wearers” against “viruses including COVID-19”. Lorna Jane made such claim on its website, Instagram account, in-store, by way of media releases and emails to consumers. Certain claims were also published on Chief Creative Officer, Loran Jane Clarkson’s Instagram account. Lorna Jane admitted that it had falsely represented that it had a scientific or technological basis for making the ‘anti-virus’ claims about its LJ Shield Activewear, when no such basis existed.

The COVID-19 context in which these representations were made was a significant consideration for the Court, with Justice Rangiah deeming Lorna Jane’s conduct as “exploitative, predatory and potentially dangerous“. However, Justice Rangiah also considered as relevant mitigating factors that Lorna Jane has not been shown to have actually profited from its conduct, and there was no indications that the contraventions actually caused harm to consumers.

In addition to the penalty, Lorna Jane also received corrective advertising orders as well as entering into a court enforceable undertaking to implement an appropriate Australian Consumer Law compliance program for a period of three years.

This case clearly indicates that all fashion businesses should carefully review any COVID-19 related claims as even brief advertising campaigns involving COVID-19 misrepresentations. Such claims have heightened sensitivity and impact in this global pandemic context and can attract significant penalties and reputational damage notwithstanding the potentially good intentions of the businesses in making such representations.

For more, read the ACCC’s press release here and the Court judgment here.

By Ayman Guirguis, Mei Gong and Nam Nguyen