Reebok runs afoul of the Australian Consumer Law

Reebok has been fined $350,000 for making misleading claims that its EasyTone shoes increased the strength and muscle tone of calves, thighs and bottoms more than traditional walking shoes.

Image: www.smh.com.au

The high-profile action by the ACCC, which was splashed across Australian media last week, is a reminder to brands and advertisers that stepping out of line with the Australian Consumer Law can be a costly mistake.

The Federal Court found that the representations made on shoe boxes and swing tags, information cards and in-store promotional material were false and misleading and that Reebok had no reasonable grounds for making the claims.

In addition to the fine the Court made orders including for Reebok to refund $35 to customers who bought the shoes and who believed they suffered loss and damage and to publish corrective notices.

“Where businesses claim their products have certain performance characteristics and benefits, they have a responsibility to ensure that those claims are accurate and supported by credible evidence. This is particularly important in cases such as this where it is difficult for consumers to independently verify the claims,” ACCC Deputy Chair Delia Rickard said.

While brands may be tempted to talk up the benefits of their products, the Reebok matter again demonstrates that claiming a product delivers additional benefits can be risky if the claim is not correct.

Section 18 of the Australian Consumer Law (found in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) prohibits conduct that is misleading or deceptive or is likely to mislead or deceive. Section 29 prohibits false or misleading representations about goods or services, including in relation to sponsorship, approval, performance characteristics, accessories, uses or benefits.

If the statements and actions of a brand create an overall impression on the target audience which is misleading, regardless of intention, that brand may be found to have breached the law. A claim can be misleading even if it is partially true. As a general principle, brands (and their agencies!) should remember that any claims they make must be specific, accurate, able to be substantiated, made in plain language and describe a real benefit (which should not be overstated).

Finally, if in doubt, be a goody two-shoes and seek legal advice – it might save your brand or agency from a costly or embarrassing mistake.