The Federal Court has fined Rosemary Bruhn $50,000 after she substituted cage eggs for free-range eggs in her South Australian business Rosie’s Free Range Eggs.
The case was brought by the Australian Competition and Consumer Commission, which claimed between March 2007 and October 2010 Bruhn represented that eggs she supplied to 109 business customers in South Australia including retail outlets, bakeries, cafes and restaurants were free range.
In fact, a substantial proportion of the eggs were cage eggs.
Get business news first
Sign up to SmartCompany’s daily newsletter
Bruhn supplied the eggs in cartons which stated “Rosie’s Direct from the chook to you”, ‘Free Range Eggs” and “produced and packed at Rosie’s Free Range Eggs” and featured an image of Bruhn outdoors surrounded by chickens.
Bruhn also issued invoices to those businesses, which also stated “Rosie’s Free Range Eggs” and “Direct from the chook to you” and included the image of Bruhn surrounded by chickens.
ACCC Commissioner Sarah Court said the consumer watchdog takes action in cases such as this to protect consumers and also to protect other egg suppliers who accurately label and supply eggs.
“The court’s decision should serve as a reminder that the ACCC will take action against suppliers who act unlawfully and represent that eggs are free range when they are not.”
The court also ordered an injunction against Bruhn to stop her from engaging in similar conduct in the future, the publication of a corrective notice in The Advertiser newspaper, that Bruhn send a letter to the affected customers advising them of the outcome of proceedings, and that she attend compliance training and pay the ACCC’s costs of $15,000.
Sally Scott, partner at Hall & Wilcox, told SmartCompany with increasing public demand for free range products some businesses have tried to get away with misleading the public in relation to ‘free range’ claims in order to be able to charge higher prices.
Others are reckless or careless as to whether the ‘free range’ representations are accurate.
“The ACCC is aware of the higher demand for free range products and has been on the lookout for any businesses that have been making misleading free range claims,” says Scott.
“The law says businesses can’t mislead consumers, whether intentionally or not,” says Scott.
She says an innocent ‘free range’ claim that is misleading will still contravene the law but the penalty will usually be higher for a misleading claim that is intentional or reckless.
Scott says a distinction needs to be drawn between advertising being misleading and “puffery and exaggeration” which the courts and the ACCC allow a certain amount of.
“Consumers understand that advertising involves a certain amount of puffery and exaggeration, so they are not likely to be misled by a small amount of it,” she says.
“However, if puffery and exaggeration goes too far, to the extent that consumers could be misled, then businesses risk action for misleading conduct.”
Scott says the key for businesses is to consider the overall impression of the advertisement or label and whether it could convey a misleading message to consumers.
She says Bruhn’s actions are “a fairly blatant breach”.
“Although businesses can get caught even if there is no intention to mislead, a business which blatantly misleads will usually attract a more severe penalty,” Scott says.
For a blatant breach, Bruhn may have got off lightly, with companies facing fines of up to $1.1 million per offence for making misleading representations while individuals face fines of up to $220,000 per offence.
SmartCompany spoke to Bruhn this morning but she declined to comment.