Consumer Watchdog: Consumer law stymied

By Celeste Gorrell Anstiss

Denie and Shelley Hiestand, skincare product manufacturers.Photo / Michelle Day
Denie and Shelley Hiestand, skincare product manufacturers.Photo / Michelle Day

Businesses citing the Bill of Rights to fight a law change which would require them to prove their advertising is true.

The new laws - aimed at stamping out misleading marketing claims - are being challenged on the basis they would contravene the central doctrine of the Bill of Rights Act: innocent until proven guilty.

Government law enforcement agency the Commerce Commission and independent watchdog Consumer NZ want legislation changed so businesses can be ordered to supply scientific and clinical-based proof about what they claim.

But the Consumer Law Reform Bill select committee, which reported back last week, has recommended the powers are not necessary.

Commission spokeswoman Allanah Kalafatelis said there were regular complaints about claims that were deemed questionable, but the commission had to go through great difficulty and expense to prove they were misleading before it could set a case in motion.

"Currently, there is no onus on a trader to substantiate the claims they make. As a result, the commission is required to effectively disprove the claim," she said. "The commission must prove beyond a reasonable doubt that the claim is false, misleading or liable to mislead. Even where the basis for the claims can be tested, such investigations tend to be expensive and resource intensive. It seems appropriate to require that traders making such claims should have a reasonable basis for them."

One investigation into a "patently questionable claim" cost the commission around $177,000, an expense which may have been avoided if the company was required to provide documentation to support the claims it made.

The select committee paper cited submissions from businesses and legal experts that argued it would be against the Bill of Rights Act to require suppliers to "prove" their innocence and it would act as a disincentive to bring out new products.

Consumer NZ chief executive Sue Chetwin said honest businesses would have nothing to worry about. She said it would weed out "cowboy" operators and level the playing field.

She said the beauty industry in particular was a minefield for consumers, who were led to believe expensive lotions had gone through robust clinical trials when this often was not the case.

The Commerce Commission has to prioritise complaints and the beauty industry has been largely left untested. The only action that has been taken was when the commission referred a L'Oreal advertisement to the Advertising Standards Authority in 2005.

The ASA ruled L'Oreal had advertised its "Wrinkle Decrease with BOSWELOX" product using the term "clinically proven results". However, the testing relied on feedback from 50 consumers reporting in such terms as the "skin appears softer". The company said a mistake was made when the advertisement was translated from French into English. "It would be more correct to say 'proven results' as opposed to 'clinically proven results'," the company said.

Chetwin said consumers must question any marketing claim carefully before buying, until the law was changed.

Expert urging caution

Kiwi skincare entrepreneur Denie Hiestand is urging people to be wary of "quasi-scientific" products found on beauty counters.

"I can't believe educated, smart women believe it. Some of the claims are outrageous. Follow the asterisk and the study is just a survey of a small number of women. I look at it and shake my head in disgust," said Hiestand, a former dairy farmer.

His philosophy is to let the ingredients in his Electric Body products do the talking.

Hiestand's skin cream is made from more than 75 per cent dairy colostrum - a milk-like fluid produced late in pregnancy. It contains no chemicals, preservatives or fillers and has been approved by the European Union as an all-natural cosmetic.

He said consumers would be horrified if they knew what they often paid for. "If you look at the ingredients' list, it's not much more than water and chemicals."

- Herald on Sunday

- Herald on Sunday

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