The Australian Competition and Consumer Commission has issued legal proceedings against Dulux for alleged misleading and deceptive advertising of paints.
The claim brought in Western Australia’s Federal Court is in relation to the promotion of the temperature reducing capabilities of Dulux’s InfraCOOL and Weathershield Heat Reflect paints.
The ACCC claims Dulux made false, misleading or deceptive representations by claiming the DuluxInfraCOOL paint applied to the roof of a house will reduce the interior temperature of the living zones of that house by 10°C, significantly reduce the energy consumption costs associated with the house and significantly reduce the carbon footprint, or environmental effect of the house by reducing energy consumption costs.
The consumer watchdog is also targeting claims made by Dulux that its Weathershield Heat Reflect paint applied to the exterior wall of a house can reduce the surface temperature of the external walls by up to 15°C, significantly reduce the interior temperature of the house and significantly reduce the energy consumption costs associated with the house.
The ACCC claims Dulux made the false representations on its website, Facebook page, in magazines, newspapers, television advertisement, in-store pamphlets, flyers and colour-cards, and on the paint tins themselves.
ACCC Chairman Rod Sims said in a statement that businesses are free to make claims in the promotion of their products, as long as their claims are truthful and have a reasonable basis.
“The ACCC believes Dulux has a corporate responsibility to make sure any claims it makes are accurate and backed by adequate scientific and/or technical evidence,” he said.
“This is especially so in relation to energy use claims given widespread consumer concern about the rapid increase in Australia’s electricity prices.”
The ACCC is seeking declarations from Dulux that it contravened the law, injunctions restraining the paint company from engaging in similar conduct in the future, corrective notices, consumer redress, penalties and the ACCC’s costs.
Lisa Walters, spokesperson for Dulux, told SmartCompany Dulux was currently reviewing the ACCC’s claims.
“Dulux has a strong record of legal compliance and takes these matters extremely seriously,” Walters said in a statement.
Sally Scott, partner at law firm Hall & Willcox, told SmartCompany Dulux could face fines of up to $1.1 million per offence.
“There is nothing inherently wrong with the alleged representations. If Dulux had reasonable grounds and can substantiate them, then it will not be liable,” she says.
“Dulux will need to prove that the alleged representations were not made or that if they were, it had reasonable grounds for making the representations.”
Scott says businesses must make sure that they have reasonable grounds for any representations they make about how their products will perform over time.
They also need to retain evidence of those grounds so that they are in the best position to defend any allegations made by the ACCC.
Scott says retaining evidence is critical and can mean the difference between winning and losing a case.
“The ACCC is very alert to misleading advertisements and we’ve seen some hefty penalties over the last 12 months in particular,” she says.
Scott says to succeed, the ACCC will need to prove firstly that the alleged representations were made and secondly that they were misleading.
She recommends that businesses need to keep both aspects in mind when reviewing a proposed advertisement.
“Businesses need to keep in mind that an advertisement can convey a range of representations, from those that are express and clear from the words used, to those that are less obvious, for example implications from pictures and from what is not said,” she says.
“Businesses need to take into account that there is a wide range of likely consumers and they will form wide ranging impressions of an advertisement.”
If the representations relate to current matters, a business should look at whether they are accurate or not and, if they relate to future matters, whether it had reasonable grounds at the time of making the representations.
Scott says it is interesting that this case relates to representations in traditional advertisements as well as promotional comments via social media.
“There is generally a greater awareness by businesses of the need to have their proposed advertisements checked for misleading representations, there is still a widespread lack of awareness of the need to ensure that material on social media is checked for misleading representations and breaches of other laws,” Scott says.
She says there is a tendency for businesses to treat social media as a very informal medium and to a certain extent that is appropriate.
“Businesses need to be aware that they can be exposed for comments they make via social media in the same way that they can be exposed for their advertisements.”
Scott warns businesses cannot assume that they will get away with misleading advertising.
“The more cavalier a business’ attitude is towards the risk of misleading advertising, the greater the fine often is,” she says.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
