Sunscreen Company Fined For Claims That Could Not Be Backed Up

Australian skincare company, Ego Pharmaceuticals Pty Ltd (Ego), has been fined $280,000 in the Auckland District Court, after it made unsubstantiated claims about the Sun Protection Factor (SPF) of two sunscreen products.

Commission Chair Anna Rawlings says that in the Commission’s view: “As new information about product testing became available to Ego it should have recognised that it did not have a reasonable basis to make the performance claims it was making about some sunscreen products already on the market.”

“Businesses have an obligation to ensure that representations can be substantiated, and this is an ongoing obligation. If new information comes to light which impacts on the claim being made, as it did in the Ego case, a business should reassess the implications of that evidence and revisit its product packaging and promotion if required,” Ms Rawlings says.

In 2019 and 2020, Ego represented that two products, Ego Sunsense Ultra SPF 50+ and Ego Sunsense Sensitive Invisible SPF 50+ provided ‘very high’ protection for consumers and were ‘SPF50+’ in accordance with an Australian and New Zealand Standard for sunscreen products.

When the products were first released in New Zealand in 2016, Ego had reasonable grounds to make the SPF representations. However, this stopped being the case from February 2019 due to an accumulation of adverse SPF results from various labs (between 2017 and 2019), followed by fraud allegations in August 2019 about the testing facility it relied on.

In a judgment decision released by the Auckland District Court on 25 November 2022, Judge Dawson said, “the principle sentencing factor in this case must [be] that of deterrence.

“While none of the harm to persons using the product or commercial competitors can be accurately quantified, its existence needs to be acknowledged in the sentence imposed.”

Ms Rawlings says the case highlights the importance of businesses having a proper basis for the claims they make about their products when they make them, and that they continue to do so.

“We expect representations about the effectiveness of products can be supported by credible and reliable evidence, at the time the representations are made and throughout the supply of the products, particularly if new evidence calls into question the reliability of the earlier evidence.

“This is particularly important because effectiveness claims are difficult, if not impossible, for consumers to be able to verify themselves.”

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 June 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.

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

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

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 was previously voluntary in New Zealand but has now been made mandatory.

The new mandatory safety standard for sunscreen supplied in Aotearoa New Zealand came 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.

Any sunscreen product manufactured or imported after 8 March 2022 needs to be compliant with the new Standard. The Safety Standard allows for sunscreen products that have been manufactured in, or imported into New Zealand before 8 March 2022, to be supplied up to 8 September 2023.

More information about compliance with the Standard is available on the Commerce Commission’s website here.

If you can't back it up, don't say it
Ego has been found guilty on 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

.

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