Court fines GO Healthy for misleading ‘NZ Made’ claims

10 December 2019
Release No. 59

Court fines GO Healthy for misleading ‘New Zealand Made’ claims

Health supplements seller GO Healthy New Zealand Ltd has been fined $337,500 in the Auckland District Court for misleading consumers by claiming its supplements were “made in New Zealand”, when the key ingredients in the majority of its products were imported.

GO Healthy pleaded guilty to three charges under the Fair Trading Act, following a Commerce Commission investigation. The charges related to promotional advertising that appeared across a variety of media, including posters and other in-store advertising materials, magazine advertisements, billboards, websites, social media and national television ads.

The advertising was used from December 2014 until December 2018 and used the phrase “New Zealand Made” to describe the supplement products. The representation implied the key ingredients in the supplements originated in New Zealand when, in fact, only eight out of more than 130 GO Healthy products during that time were made exclusively from ingredients originating in New Zealand. While the production process occurred here, the ingredients inside the capsules were largely imported. Some videos that were part of the campaign also included voice over messages and images that reinforced the impression that GO Healthy’s products were made in New Zealand from ingredients that originated from New Zealand.

General Manager Competition and Consumer Antonia Horrocks says all businesses must remember that any labelling used on their products must be clear and truthful.

“Consumers are often influenced by the origin of goods when considering whether to buy something; this is particularly so for ingestible products, such as health supplements. Consumers are entitled to rely on the information provided by retailers about where a product originated. GO Healthy breached that trust by misleading its customers with its claims that its supplements were made in New Zealand. For health supplement consumers, where the ingredients have come from is important information.”

In sentencing Judge Sharp said, “New Zealand made representations may provide a sense of affinity to consumers. They may see products as desirable as a result of being made in New Zealand, and consumers may also see beneficial aspects that they can attribute to the products.”

“If the representations are untrue, they disadvantage competitors. The representations might undermine the benefits to those who are truly able to the make the representations that their products are made in New Zealand.”

Background
GO Healthy is a wholesaler of health supplements, selling its products to pharmacies and health stores throughout New Zealand. Since 2018, as a result of previous Commerce Commission action, Go Healthy has amended most of its marketing materials to include the statement ‘New Zealand Made From Imported and Local Ingredients’.

Previous country of origin cases
• In July 2019 a New Zealand small goods producer was fined $180,000 for misleading consumers about the place of origin of some of its ham products.

• In May 2017 a health supplement company and its owner were fined more than $500,000 for claiming that bee pollen was New Zealand-made when the bee pollen was sourced from China.

• In April 2016 the High Court found that a health supplement company’s “New Zealand made” claims were misleading because all the active ingredients were imported from overseas.

• Since 2011 the Commission prosecuted 11 companies and 11 individuals for selling imported alpaca rugs as “Made in New Zealand”, and/or for claiming duvets were predominantly alpaca, merino wool or cashmere when they were not. A total of more than $1.5 million in fines had been ordered when the most recent company was fined in 2017.

Consumers’ Right to Know (Country of Origin of Food) Act 2018
In 2018 Parliament introduced new country-of-origin labelling requirements for food; but these do not apply to nutritional supplements. The Consumers’ Right to Know (Country of Origin of Food) Act 2018 introduced mandatory labelling to provide information about the country of origin of certain single-ingredient foods.

Regulations that will prescribe the labelling requirements are currently being developed by the Minister of Commerce and Consumer Affairs.

Once complete, following a transition period (six months for fresh foods and eighteen months for frozen foods), failure to label certain single-ingredient products as required will be a breach of the Fair Trading Act.

If you can’t back it up, don’t say it
The Commission has produced this video and guidance to assist businesses to comply with the law when making representations about their products.

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