The competition watchdog has taken action against an Australian family-owned duck company for alleged “false, misleading and deceptive conduct” in relation to the promotion of its meat products.
The Australian Competition and Consumer Commission has alleged Melbourne-based Luv-a-Duck misled consumers into thinking its ducks had substantial access to outdoor areas, when in reality they did not.
This is the second time in less than a year the ACCC has initiated action against an Australian duck company, with Pepe’s Ducks ordered to pay $400,000 in penalties and costs by the Federal Court in December 2012 after claiming its ducks were ‘open range’ and ‘grown nature’s way’.
The ACCC also said Luv-a-Duck claimed its ducks were grown and grain fed in the Victorian Wimmera Wheatlands district, and that the business said ducks were “range reared and grain fed”.
The ACCC alleges the duck meat was actually processed from ducks which did not have substantial access to the outdoors.
The consumer watchdog is seeking declarations, injunctions, monetary penalties, an order for Luv-a-Duck to implement a trade practices compliance program and orders for Luv-a-Duck to publish corrective notices on its website and business premises and provide a corrective notice to its customers, and cost.
Luv-a-Duck said in a statement its always cooperated with the ACCC, but it believes its statements are factual and not misleading.
“Luv-a-Duck does not accept the ACCC’s allegations and believes the alleged offending statements are statements of fact and are not misleading or deceptive, nor are they likely to mislead consumers.
“Luv-a-Duck emphasises that the quality and safety of its products are not a point of issue in these proceedings,” Luv-a-Duck said.
Hall and Wilcox partner Sally Scott told SmartCompany the ACCC is cracking down on these types of claims, known as “credence claims”.
Scott says businesses can “fall into a trap” of making these kind of claims by stretching the truth when trying to justify higher pricing or increase demand.
“As pressures continue to mount in the retail space, we are likely to continue to see businesses making claims aimed at enabling them to charge higher prices or aimed at increasing demand.
“Businesses must realise that while a certain amount of puffery is permitted when promoting a product, once a claim steps over the line and is misleading, businesses are at risk of ACCC action for misleading conduct,” she says.
In August 2012, King Island Meatworks and Cellars was also found guilty of misleading consumers by having ‘King Island’ in its name and advertising material, when in reality its products were not from King Island.
Scott says last year there was also a series of ACCC actions involving misleading claims about ‘free range’ eggs and chicken.
In September 2012, Rosemary Bruhn of Rosie’s Free Range Eggs was fined $50,000 for claiming cage eggs were ‘free range’.
Scott says there is “nothing inherently wrong” with making a credence claim, but businesses should be careful not to mislead consumers.
“Businesses making credence claims should consider the following questions: firstly, what is the overall impression and secondly, whether that overall impression is likely to be misleading to consumers,” she says.
Scott says companies face a maximum fine of $1.1 million per office for a misleading credence claim and individuals face a maximum fine of $220,000 per offence and there have been some significant fines over the past year.
“We have seen some very large penalties over the past year for misleading conduct, including five penalties of between $1.95 million and $3.61 million. All but one of these cases related to misleading advertising or labelling,” she says.
ACCC commissioner Sarah Court said in a statement credence claims is a new priority area.
“Consumers must be able to trust that what is on the label is true and accurate. Businesses need to make sure they are not misleading consumers into paying a premium for products that don’t match the claims made on the label,” Court says.