Consumer Protection

Company Pays Fine For False Labelling
Asia Pacific

The Australian Competition and Consumer Commission (ACCC) has announced that Club Trading & Distribution (CTD), distributor of eucalyptus oil, has paid a A$6,600 infringement penalty for false labelling. The distributor could not substantiate the “made in Australia” claim that appeared on the label of its eucalyptus oil. According to the ACCC, during most of 2011, CTD actually imported the oil from China and southern Africa.
ACCC’s media release (16 March 2012)
(Source: ACCC)

Censure Issued Against Bank
Europe, Middle East and Africa

The UK Financial Services Authority (FSA) has published a final notice (9 March 2012) in respect of Bank of Scotland (BoS), concluding that the firm was guilty of “very serious misconduct, which contributed to the circumstances that led to the UK government having to inject taxpayer funding” into its parent company HBOS Group. According to the FSA, the bank breached Principle 3 of the FSA’s Principles for Businesses, which states that “[a] firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems”. In light of the taxpayer funds that have already been spent to rescue BoS, the FSA has decided against imposing a penalty on the bank, as levying a fine would mean taxpayers would effectively pay twice for the same actions committed by the bank. Instead, the FSA has issued a public censure against the bank.
FSA’s media release (9 March 2012)
(Source: FSA)

Consumer Voucher Operator Breaches Advertising Code
Europe, Middle East and Africa

Out-Law reports that the UK Advertising Standards Authority (ASA) has ruled that Groupon breached advertising rules when it promoted a cosmetic treatment on its website. Reportedly, the advertisement on the website featured discounted “facial injection treatments” which were in fact Botox treatments. Botox is reportedly a prescription-only medicine, the public advertising of which is prohibited under the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing. Groupon has reportedly been prohibited from featuring the same advertisement again and has been told “to take care when promoting offers of this type to ensure they do not inadvertently advertise a prescription-only medicine”.

According to Out-Law, Groupon defended its actions by stating that the advertisement was not promoting Botox but instead “a redeemable voucher for a supplier of a choice of services”. Reportedly, Bath Facial Aesthetics, which was involved with the offer, had told ASA that the advertisement promoted two discounted treatments – one specifically for Botox and the other offering consumers a choice between Botox injections or a dermal filler. The ASA reportedly made its decision following this revelation. Follow the ASA’s decision, Groupon has stated that it has “further improved [its] checks and processes around claims for health and beauty products to make sure [its] customers have the information they need to make informed buying decisions”, reports Out-Law. 
Out-Law: Groupon’s Botox voucher promotion in breach of advertising rules, watchdog says (14 March 2012)
(Source: Out-Law) 

OFT Revokes Companies’ Licence for Prolonged Breaches
Europe, Middle East and Africa

The UK Office of Fair Trading (OFT) has announced that it has decided to revoke the consumer credit licence of credit broker Yes Loans Limited (Yes Loans), as well as two associated businesses, Blue Sky Personal Finance Limited and Money Worries Limited. According to the OFT, Yes Loans failed to comply with the Consumer Credit Act 1974 and associated regulations, and with requirements previously imposed by the OFT.

Yes Loans’ breaches include:

  • “using high pressure sales tactics to persuade consumers to provide their debit or credit card details on the false premise that they were required for an identity and/or security check”;
  • “deducting brokerage fees without making it clear that a fee was payable, and/or without the consumer’s consent”;
  • “failing to introduce some consumers to the product originally sought, frequently arranging short-term, high interest, loans instead”;
  • “misleading consumers into believing it was a loan provider rather than a credit broker”; and
  • “treating customers poorly by not providing refunds in a timely manner”.

Despite the changes introduced by Yes Loans following the OFT’s findings, including no longer charging upfront fees, the OFT found that “the evidence of prolonged engagement in deceitful and oppressive business practices, and the continuing presence of some of the staff responsible for running the businesses, makes [Yes Loans] unfit to hold a consumer credit licence”.
OFT’s media release (8 March 2012)
(Source: OFT)

Coca-Cola and Pepsi Make Changes to Avoid Cancer Label

Reuters reports that Coca-Cola Co and PepsiCo are introducing changes to the production of an ingredient in their colas to avoid the need to include a cancer warning on their packaging. Reportedly, the beverage giants have instructed the suppliers of the caramel colouring in their colas “to alter their manufacturing process to meet the requirements of a California ballot initiative aiming to limit people’s exposure to toxic chemicals”; however, consumers will notice no difference in the colour or taste of the products. According to Reuters, the alteration is meant to lower the amount of a chemical called 4-methylimidazole, which, in January 2012, was added to the list of chemicals covered by California’s Safe Drinking Water and Toxic Enforcement Act 1986. High levels of this chemical have reportedly been linked to cancer in animals.
Reuters: Coke, Pepsi make changes to avoid cancer warning (9 March 2012)
(Source: Reuters)