Discount retailer The Reject Shop has been ordered to pay a penalty of $140,000 and court costs of $15,000 after Consumer Affairs Victoria dragged it to the Federal Court over concerns the labelling on its “UFO” and balloon projectile toys breached safety standards.
In 2015, Consumer Affairs officers identified two products sold at Reject Shop stores it believed breached the Australian Safety Standard for products in that category.
One toy, the “Action Copter”, involved projectiles but did not include warnings not to point the product at a person’s face, and to only use projectiles that had been supplied by the manufacturer when using the toy.
The other toy was called the “Let’s Party Balloon Helicopter” and “was an unsafe design that could have increased the risk of injury”, according to the regulator.
The Australian Safety Standard for projectile toys sets out design and labelling elements that must be met for safety purposes before a toy can be sold.
As a result of the findings, 1700 of the balloon toys and 6200 units of the UFO toy were removed by The Reject Shop, which destroyed the balloon toy stock and corrected the labelling for the UFO toy stock.
The Reject Shop fully cooperated with the regulator throughout the process, but three years on from the initial investigation, the Federal Court has ordered the company pay a penalty of $140,000 for breaches of the safety standard, plus $15,000 in costs.
The company must also publish a product recall notice for the toys and display this on its website and in stores, and customers who return the toys must be paid a full refund.
The Reject Shop has also enhanced its product compliance program and must pay for an independent specialist to monitor its progress on this for a three-year period, according to the court order.
In a statement provided to SmartCompany, The Reject Shop chief executive Ross Sudano said “the safety of our customers is paramount”.
“As soon as we became aware of issues relating to these two products, we immediately removed them from sale and have fully co-operated with Consumer Affairs Victoria,” he said.
Sudano said the company has also employed additional compliance staff and reviewed its compliance frameworks in the time since the concerns were raised about the products.
Know the mandatory standards, especially when importing
Businesses have easy access to information about minimum product safety standards, but LegalVision principal and general counsel Ursula Hogben believes too many retailers still don’t comply properly with these guidelines.
“The ACCC has product safety guides, and there are around six guides written for small businesses. If you’re a small business that sells to the public, you should be reading these guides,” she says.
Hogben observes that with so many Australians starting up their own retail businesses and importing products, it’s critical that SMEs have plans and contracts in place to make sure any stock they buy from overseas is compliant with the regulations for that product category.
“When you’re purchasing from overseas, you are the importer, and you’re responsible for complying with the safety standards in Australia. My advice would always be to get a sample [before placing a full order],” she says.
It’s also critical that businesses write the specific product safety requirements into any contracts with a supplier, because that way they can be covered for a refund if they end up receiving stock that can’t legally be sold in Australia.
“What you want is to be able to send it back and get a full refund if it doesn’t meet them [the standards],” she says.
The safety of your consumers should always be a top priority, and it’s critical to make sure any products you sell are not going to potentially compromise that, Hogben says.
If a business does get caught out by a regulator over safety concerns, court action can regularly last longer than a year, she says.
“It takes a considerable amount of management time and cost and it’s really stressful,” she says.