Daiso franchises fined $355,000 over thousands of unsafe products

The operator of six Daiso franchise stores in Melbourne has been fined $355,000 by the Federal Court of Australia for selling thousands of products that did not meet Australian product safety standards.

Daiso is a Japanese retail franchise that sells every item in store for $2.80. In Australia, the brand is operated by separate franchisors at sites in Victoria, New South Wales, Queensland and South Australia.

Consumer Affairs Victoria commenced legal action against Origo & Co Pty Ltd, previously known as Daiso (Australia) Pty Ltd and trading as Daiso, in mid-2017 after an investigation uncovered more than 15,295 products that did not comply with Australian mandatory consumer safety standards and information standards.

The products identified included: projectile toys that posed a risk to eye and face injuries; toys for children under the age of three that could pose a choking hazard; and elastic luggage straps, sunglasses and cosmetics with incorrect or insufficient labelling.

The products were sold or offered for sale between 2011 and 2017 and according to court documents, the profits generated by the sale of the products totalled approximately $24,000.  

In a decision handed down in July, the Federal Court ruled in favour of the consumer watchdog, and found Origo had contravened the Australian Consumer Law and the Australian Consumer Law applied in Victoria on multiple occasions.

The court also found Origo engaged in misleading and deceptive conduct in April 2011 by stocking sunscreen products that did comply with the correct labelling and advertising requirements for such products.

Origo was ordered to pay pecuniary penalties of $355,000 and to pay $15,000 towards Consumer Affairs Victoria’s costs. It will also be required to cover costs associated with destroying the seized goods and enact a compliance program.

The company was also ordered to pay refunds to any customers returning the non-compliant products and to display prominent notices of the court’s orders in its stores, on its website and on its Instagram account.

In a statement this week, Simon Cohen, director of Consumer Affairs Victoria, said the court’s decision sends a strong message to retailers about safety and compliance responsibilities.

“The onus is on traders to ensure the products they are selling or supplying meet mandatory requirements, ensuring consumers can buy products with confidence,” he said.

“Those who don’t comply can expect a visit from Consumer Affairs Victoria inspectors who will be out in force as part of the statewide compliance program.”

This is not the first time businesses associated with the Daiso brand have been the subject of legal action.

In December 2017, Daiso Industries (Australia) Pty Ltd, a business that is not related to Origo, was fined $1 million by the Federal Court in relation to the sale of unsafe products in Victoria, New South Wales and Queensland.

According to new figures published by the Australian Competition and Consumer Commission this week, half of all Australian homes were affected by unsafe products in 2017-18, and more than 4.5 million items were recalled for safety reasons last financial year.

Manufacturers and retailers are required to provide reports to the ACCC regarding unsafe products, and based on these reports, the ACCC says at least 10 people a day in Australia are injured and require medical attention because of unsafe products.

Product recall notifications were highest in the summer months, according to the ACCC, with outdoor and camping products, kitchenware, furniture and items for babies and children among the highest represented categories.

SmartCompany contacted Origo & Co Pty Ltd and Daiso Industries Pty Ltd but did not receive a response prior to publication.

NOW READ: The Reject Shop ordered to pay $155,000 after court action over unsafe projectile toys