Australian skincare company, Ego Pharmaceuticals Pty Ltd (Ego), has been fined $280,000 in the Auckland District Court, after it made unsubstantiated claims about the Sun Protection Factor (SPF) of two sunscreen products.
Commission Chair Anna Rawlings says that in the Commission’s view: “As new information about product testing became available to Ego it should have recognised that it did not have a reasonable basis to make the performance claims it was making about some sunscreen products already on the market.”
“Businesses have an obligation to ensure that representations can be substantiated, and this is an ongoing obligation. If new information comes to light which impacts on the claim being made, as it did in the Ego case, a business should reassess the implications of that evidence and revisit its product packaging and promotion if required,” Ms Rawlings says.
In 2019 and 2020, Ego represented that two products, Ego Sunsense Ultra SPF 50+ and Ego Sunsense Sensitive Invisible SPF 50+ provided ‘very high’ protection for consumers and were ‘SPF50+’ in accordance with an Australian and New Zealand Standard for sunscreen products.
When the products were first released in New Zealand in 2016, Ego had reasonable grounds to make the SPF representations. However, this stopped being the case from February 2019 due to an accumulation of adverse SPF results from various labs (between 2017 and 2019), followed by fraud allegations in August 2019 about the testing facility it relied on.
In a judgment decision released by the Auckland District Court on 25 November 2022, Judge Dawson said, “the principle sentencing factor in this case must [be] that of deterrence.
“While none of the harm to persons using the product or commercial competitors can be accurately quantified, its existence needs to be acknowledged in the sentence imposed.”
Ms Rawlings says the case highlights the importance of businesses having a proper basis for the claims they make about their products when they make them, and that they continue to do so.
“We expect representations about the effectiveness of products can be supported by credible and reliable evidence, at the time the representations are made and throughout the supply of the products, particularly if new evidence calls into question the reliability of the earlier evidence.
“This is particularly important because effectiveness claims are difficult, if not impossible, for consumers to be able to verify themselves.”
The two Ego products have not been distributed in the New Zealand market since December 2019. Ego issued a withdrawal notice for the products in June 2020.
The Commission encourages consumers with any concerns about their sunscreen products to contact the supplier or manufacturer in the first instance. If consumers feel a business has breached the Fair Trading Act, they can complain on the Commission’s website .
Background
Ego Pharmaceuticals is an Australian-owned skincare manufacturer, which supplied its products into the New Zealand market via a wholesale distributor.
The Commerce Commission opened an investigation into Ego following Consumer NZ’s testing in 2019 and a subsequent complaint filed with the Commission.
Sunscreen Standard
The SPF claims made by Ego in this case were made with reference to the Australian and New Zealand Standard AS/NZS 2604:2012 which specifies classification, performance and marking requirements for sunscreens. This standard was previously voluntary in New Zealand but has now been made mandatory.
The new mandatory safety standard for sunscreen supplied in Aotearoa New Zealand came into force on 8 September 2022. The new Standard places obligations on businesses that import, manufacture and/or supply sunscreen products in Aotearoa New Zealand.
Any sunscreen product manufactured or imported after 8 March 2022 needs to be compliant with the new Standard. The Safety Standard allows for sunscreen products that have been manufactured in, or imported into New Zealand before 8 March 2022, to be supplied up to 8 September 2023.
