Three online retailers fined for misleading customers

Internet Retailing

9th May 2017

The Federal Court has ordered three online e-cigarette companies to pay penalties for breaching the Australian Consumer Law (ACL).

Online retailers The Joystick Company, Social-Lites and Elusion Australia Limited (in liquidation) have been fined for making false and misleading claims about the presence of carcinogens in e-cigarettes.

“Consumers were led to believe by this conduct that when using these e-cigarette products, they would not be exposed to the harmful chemicals found in ordinary cigarettes,” ACCC acting chair Delia Rickard said.

“In fact, they were exposed to the same chemicals, including a known carcinogen that has no safe level of exposure.”

Independent testing commissioned by the ACCC identified the presence of carcinogens and toxic chemicals, such as formaldehyde, acetaldehyde and acrolein in the products of Joystick, Social-Lites and Elusion, as well as acetone in Social-Lites’ products.

The ACCC understands that this is the first time any regulator globally has successfully taken action on these grounds.

In separate proceedings against each of these companies, the Federal Court found that each of Joystick, Social-Lites and Elusion contravened the ACL by making representations that their products did not contain harmful carcinogens and toxins, when this was not the case.

The Court also found that the directors of Joystick and Elusion, and the CEO of Social-Lites, were knowingly concerned in the contravening conduct of their respective companies.

Following admissions made by each of the companies and individuals and joint submissions on penalties, the Federal Court ordered that:

• Joystick pay a pecuniary penalty of $50,000, and its director a penalty of $10,000
• Social-Lites pay a pecuniary penalty of $50,000, and its CEO a penalty of $10,000
• Elusion pay a pecuniary penalty of $40,000, and its director a penalty of $15,000

The ACCC has written to over 30 Australian e-cigarette suppliers reminding them of their ACL obligations, in particular to ensure information provided to consumers is accurate.

“Businesses must ensure that they provide accurate information to customers, and have a reasonable basis for making any representations. This is particularly important for products that may cause harm to the health of consumers,” Rickard said.