Guilty Plea From Ego Pharmaceuticals On Unsubstantiated SPF 50+ Claims

Australian skincare company, Ego Pharmaceuticals (Ego), has pleaded guilty to two charges under the Fair Trading Act, for making unsubstantiated representations about the Sun Protection Factor (SPF) of two sunscreen products, Ego Sunsense Ultra SPF 50+ and Ego Sunsense Sensitive Invisible SPF 50+.

Commerce Commission General Manager of Fair Trading, Vanessa Horne, says Ego accepts that between February 2019 and June 2020 it did not have a reasonable basis to make the SPF claims made on the sunscreen products.

“We opened an investigation into Ego following Consumer NZ’s testing in 2019 and a subsequent complaint filed with the Commission.

“In 2019 and 2020 Ego represented that both products provided ‘very high’ protection for consumers and were ‘SPF50+’ in accordance with an Australian and New Zealand Standard for sunscreen products. While it had reasonable grounds for those claims when the products were first released in New Zealand, the accumulation of test results between 2017 and 2019 meant that from February 2019 Ego ceased to have reasonable grounds to make those claims.”

The Fair Trading Act requires businesses to make sure that they have a proper basis for the claims they make about their products when they make those claims - they must be able to back them up.

The two Ego products have not been distributed in the New Zealand market since December 2019. Ego issued a withdrawal notice for the products in 2020.

The Commission encourages consumers with any concerns about their sunscreen products to contact the supplier or manufacturer in the first instance. If consumers feel a business has breached the Fair Trading Act, they can complain on the Commission's website here.

As the case against Ego is now before the Court, the Commission cannot comment further on this case. Sentencing has been scheduled for 26 October 2022.

The new Sunscreen Standard
The SPF claims made by Ego in this case were made with reference to the Australian and New Zealand Standard AS/NZS 2604:2012 which specifies classification, performance and marking requirements for sunscreens. This standard is commonly adopted in New Zealand although compliance with any sunscreen standard in New Zealand has been voluntary up until this week.

A new mandatory safety standard for sunscreen supplied in Aotearoa New Zealand comes into force on 8 September 2022.

The new Standard places obligations on businesses that import, manufacture and/or supply sunscreen products in Aotearoa New Zealand.

A sunscreen product cannot be supplied in Aotearoa New Zealand without meeting the Standard requirements.

The Commerce Commission has been working with the industry to help communicate the new obligations on businesses, compliance requirements and implications for non-compliance. More information about compliance with the Standard is available on the Commerce Commission’s website here.

If businesses have any questions about the new standard and how to comply, they can contact the Commission by emailing sunscreen@comcom.govt.nz.

Background
Ego Pharmaceuticals is an Australian-owned skincare manufacturer, which supplied its products into the New Zealand market via a wholesale distributor.

If you can't back it up, don't say it
Ego has pleaded guilty to two charges under Section 12A of the Fair Trading Act.

Section 12A of the Fair Trading Act 1986 prohibits the making of unsubstantiated representations and came into effect in June 2014.

The law prohibits a trader from making an unsubstantiated representation about goods or services. A representation is unsubstantiated if the trader does not, when the representation is made, have reasonable grounds for making it.

When considering whether a business has reasonable grounds for a claim, the following factors are taken into account under the law:

• the nature of the goods or services about which the claim was made
• the nature of the claim
• any research steps or other steps taken by or on behalf of the business making the claim, before the claim was made
• the nature and source of any information the business relied on to make the claim
• the actual or potential effects of the claim
• compliance with the requirements of any standards, codes or practices relating to the grounds for the claim.

The prohibition does not apply to representations that a reasonable person would not expect to be substantiated.

Consumers are entitled to rely on the accuracy of claims made about the products they buy and businesses should ensure that they have sufficiently credible information to hand to support the claims they make, when they make them. It is an offence for a trader to make a claim about a good or service without reasonable grounds for doing so, whether or not the claim is also proved to be false or misleading in breach of other provisions of the Fair Trading Act. You can watch our video If you can’t back it up, don’t say it and see more about substantiation and making accurate claims on the Commission's website here .

Complaints to the Commerce Commission

If consumers think a business or person is not complying with one of the laws we enforce, they can make a complaint to the Commerce Commission here.

We assess every complaint we receive, but we are unable to investigate all of them. However, with all complaints, we use the information to contribute to our future priorities and to understand emerging issues. Every complaint and enquiry received provides information that is valuable to the Commission.

When deciding where to focus our attention or whether to open an investigation, we look to understand whether there has been a potential breach of the Act, the level of harm caused (or that could be caused) and the seriousness of the conduct. At that point we will determine whether further action may be needed and what that could look like, in line with our enforcement criteria.

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