by Katarina Klaric, Principal, Stephens Lawyers & Consultants
Knowing the advertising laws that apply to the marketing and advertising of a particular product or services is critical to avoid breaches resulting in fines and court proceedings. The recent case of Lorna Jane “Anti-virus Activewear” advertising and marketing campaign provides an example of how an advertising campaign may result in an alleged breach of not only the Australian Consumer Law but also the Therapeutic Goods Act, with penalties in excess of $5 million being imposed.
TGA issues infringement notices to Lorna Jane for breaches of the Therapeutic Goods Act and Advertising Code
The Therapeutic Goods Administration (‘TGA’) issued Lorna Jane Pty Ltd (‘Lorna Jane‘), the manufacturer and supplier of woman’s active wear, three infringement notices for fines totalling $39,960 in respect of advertising of its active wear. The TGA alleged that Lorna Jane, by advertising its active wear as “Anti-Virus Activewear” protecting you against infectious diseases, like COVID 19, had represented its active wear as a therapeutic good and therefore was subject to the Therapeutic Goods Act, the regulations and Therapeutic Goods Advertising Code. Lorna Jane’s “Anti-Virus Activewear” was not on the Australian Register of Therapeutic Goods (‘ARTG’) and Lorna Jane had failed to seek approval from the TGA before making the alleged claims[i].
Federal Court orders Lorna Jane to pay $5 million for false Anti-Virus Activewear claims[ii]
The Australian Competition and Consumer Commission (‘ACCC’) on the 21 December 2020 also commenced separate proceedings in the Federal Court of Australia against Lorna Jane and its director, Ms Clarkson, in respect of the advertising and marketing of the “Anti-Virus Activewear” on its website, Facebook and Instagram accounts, in media releases and instore advertising.
In summary, the ACCC alleged that Lorna Jane had made false or misleading representations in contravention of sections 18, 29 and 33 of the Australian Consumer Law, in connection with the promotion and supply of its product promoted as “Anti-Virus Activewear”, which had been treated with a substance referred to as LJ Shield by making representations that:
- the LJ Shield Anti-Virus Activewear eliminated viruses including COVID-19,
- consumers who wore the LJ Shield Anti-Virus Activewear would be protected from and could not spread viruses including COVID-19,
- there was reliable scientific or technological basis for these representations,
when this was not the case. The ACCC alleged that at the time the representations were made they were not supported by scientific or other testing. The ACCC also alleged that Ms Clarkson was a party to or knowingly concerned in Lorna Jane’s contravention of the Australian Consumer Law[iii].
Lorna Jane admitted making a number of representations and contravening sections 18, 29(1)(g) and 33 of the Australian Consumer Law. Lorna Jane also agreed to a penalty of $5 million being imposed, injunctive relief, the publication of corrective notices, the implementation of an Australian Consumer Law compliance program and payment of ACCC’s costs in the sum of $370,000.
The court approved the proposed penalty and agreement between the parties. The court considered that the penalty was appropriate given the nature and seriousness of the contravention of the Australian Consumer Law, the need for deterrence of such conduct, the admissions made and agreement to orders by Lorna Jane[iv].
Therapeutic Goods Advertising Compliance
In addition to complying with the Australian Consumer Law, advertising of therapeutic goods (such as medicine, medical devices and complementary medicines) must also comply with the Therapeutic Goods Act, regulations and Therapeutic Goods Advertising Code. The Therapeutic Goods Act regulates the manufacturing, import, export, supply and advertising of therapeutic goods. The TGA is responsible for the administration of and compliance with the Act including advertising compliance.
The failure to comply with advertising requirements for therapeutic goods and any warnings and directions issued by the TGA to address non-compliant advertising of “therapeutic goods” can have serious consequences and result in substantial penalties.
Evolution Supplements Australia (‘Evolution Supplements’) was ordered by the Federal Court to pay penalties of $11 million for unlawfully advertising on its website a range of unapproved sports supplements and pre-work out products, in breach of the Therapeutic Goods Act. The Director of Evolution Supplements was also ordered to pay $1 million in penalties in failing to cause the company to cease advertising of “therapeutic goods” not entered on the Australia Register of Therapeutic Goods (“ARTG”) in breach of the Therapeutic Goods Act and for failing to comply with advertising warnings and directions issued by the TGA[v].
Therapeutic Goods Advertising Compliance – 2019-20 Annual Report
The Therapeutic Goods Advertising Compliance – 2019-20 Annual Report details the TGA compliance and enforcement activities in relation to advertising breaches and includes case studies concerning illegal advertising.
With the COVID-19 pandemic the TGA has been pro-active in providing information for manufacturers, suppliers and advertisers to assist in understanding their obligations under the therapeutic goods laws. The TGA established the TGA COVID-19 Enforcement Taskforce to co-ordinate a consistent compliance in respect of testing kits, face masks, hand sanitisers and disinfectants[vi].
The TGA has also published information on its website [https://www.tga.gov.au ]to assist advertisers with compliance including:
- Warnings and Information releases in respect of COVID-19 advertising (March 2020)
- Advertising compliance checklist-consumer advertising (October 2020).
- Advertising COVID-19 vaccines to the Australian public (22 February 2021)
- COVID-19 advertising and import compliance (22 February 2021)
The TGA issued 155 infringement notices during 2019-2020 for alleged breaches of the therapeutic goods laws or conditions of registration relating to advertising, of which 51 related to COVID-19 matters. The TGA also issued court proceedings against a number of companies and their directors seeking injunctive relief and imposition of penalties for advertising breaches[vii].
Advertising Compliance by Suppliers of Therapeutic Goods
Advertising compliance of therapeutic goods is complex covering a multitude of different products and markets. Therapeutic goods are often promoted and marketed by a broad range of suppliers including pharmacies, supermarkets, grocery stores, eBay and other e-commerce sellers, health professionals and health food shops. Advertising compliance applies to all suppliers and is not limited to manufacturers or sponsors of a therapeutic good. The complexities involving advertising compliance requires:
- A good understanding of the Therapeutic Goods Act and Therapeutic Goods Advertising Code and the prohibitions and restrictions on advertising of therapeutic goods and exemptions that apply.
- The ability to determine whether the product is a “therapeutic good” and subject to compliance with the Therapeutic Goods Act and Therapeutic Goods Advertising Code.
- Knowledge of the ARTG listing or registration requirements for products which are “therapeutic goods”.
- Continuous monitoring of guidelines, warnings and releases relating to advertising of therapeutic goods issued by the TGA.
- Continuous training and education with a comprehensive compliance program.
- Review and audit of advertising material by an external expert to ensure advertising compliance.
The TGA provides information and resources to assist manufacturers, importers and other suppliers with advertising compliance.
Authored by Katarina Klaric, Principal, Stephens Lawyers & Consultants
© Stephens Lawyers & Consultants. 3 August 2021.
This update is not intended to be a substitute for obtaining legal advice.
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[ii] Australian Competition and Consumer Commission v Lorna Jane Pty Ltd  FCA 852. [23 July 2021]
[iii] Australian Competition and Consumer Commission v Lorna Jane Pty Ltd & Anor QUD 394/2020 Concise Statement and Originating Motion.
[iv] Australian Competition and Consumer Commission v Lorna Jane Pty Ltd  FCA 852. -[23 July 2021]
[v] Secretary, Department of Health v Evolution Supplements Australia Pty Ltd (No.2)  FCA 872
[vi] Therapeutic goods advertising compliance 2109-20 Annual Report, p24, Australian Government, Therapeutic Goods Administration, Department of Health.
[vii] Ibid, p25.