Chemist Warehouse enters battle over online advertising breach

Discount retail chain Chemist Warehouse has copped a slap on the wrist from the health and medicine products ads regulator for breaching advertising standards, but it seems the retailer isn’t going to roll over without a fight.

In December 2013 the chain was found by the Complaints Resolution Panel to have misled consumers to believe vitamin products advertised on its website could help treat and prevent breast cancer and strokes.

Advertisements for these vitamin products appeared adjacent to written copy about breast cancer and strokes.

“Any reasonable consumer would relate the content of the ‘Breast Cancer’ and ‘Stroke’ pages to the advertisement promoting the supply of vitamins, given the content of the vitamins/herbal/minerals subsection encouraging the use of vitamins, herbal and mineral products to help treat and prevent these diseases,” the Panel determined.

As a consequence, the Panel ruled Chemist Warehouse should withdraw the advertisement from further publication, publish a retraction and provide evidence of its compliance within 14 days of being notified of the request.

However, Chemist Warehouse commercial manager Damian Gance told Fairfax the company would not comply with the retraction.

The Complaints Resolution Panel has no authority to enforce its requests; however, defiance of its orders could result in court action led by the Therapeutic Goods Administration.

SmartCompany contacted Chemist Warehouse, but no one was available for comment prior to publication.

In its defence, Chemist Warehouse argued the situation was no different to what occurs in newspapers where ads appear alongside articles.

“The respondent also argued that the juxtaposition of the ‘health information’ with retail links on each side was analogous with newspapers’ news content with advertisements on the same page and does not make the entire page an advertisement, that content sought by a consumer is plainly displayed in the central window of the page and the non core, advertised content is around the edges of the web page,” the Panel determination says.

Chemist Warehouse also emphasised the importance of health information and said the information in question had not been on the site for two years and all links and search results had been removed for commercial reasons in 2011.

TressCox lawyers partner Alistair Little told SmartCompany it’s an unusual case dependent on whether or not the supposed advertisements are relevant to the articles displayed on the page.

“The only similar case was with Google AdWords. The case went to the high court last year and the Australian Competition and Consumer Commission argued Google had breach consumer laws by misleading people to think the companies featured in the Google ads were linked to the businesses people were searching for,” he says.

“The court ruled there had been no breach of the law and Google was just putting in front of people what advertisers had provided.”

But Little says in this case there is an argument the ads and articles were linked.

“The final outcome will probably be that it ends up in court if Chemist Warehouse ignores the determination of the Panel,” he says.

“But the Panel are only able to request businesses to comply. It’s a regulator, but not in the usual sense because it can’t enforce the law.”

Little says businesses need to realise the placing of advertisements on a page is important.

“You need to think carefully about if the ad, when read in conjunction with the text, makes a representation to consumers that the two are linked,” he says.

“There is a clear need not just to throw things together on a website without thinking about the way things read in conjunction with one another.”

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