Advertising health related claims for COVID-19 products
Currently there is an increase in the production and sale of products to help deal with risks from COVID-19 such as face masks, hand sanitisers and other personal protective equipment. In some cases, these products are advertised with health related claims, including the prevention of COVID-19. With a rush to get products to market quickly in response to global demand there is an increased risk of unsubstantiated or misleading and deceptive claims.
Products and their promotion must comply with local legislation including the Fair Trading Act 1986 (Fair Trading Act), the Medicines Act 1981 (Medicines Act) including regulations around medical devices, the Consumer Guarantees Act 1993 and relevant industry and advertising codes. Any advertisements in New Zealand, regardless of whether the product is manufactured in or outside of New Zealand, must only include claims that are substantiated and accurately represent the product being sold, and must not mislead or deceive consumers as to its nature or quality.
Businesses must be able to substantiate any representation they make or imply about their goods or services including claims about the efficacy of a product. A claim is unsubstantiated if the seller does not have reasonable grounds to make the claim at the time it is made. Only the Commerce Commission can prosecute traders for failing to substantiate their claims.
Health claims or claims in relation to beneficial effects of a product for COVID-19 are likely to attract particular scrutiny from the New Zealand Commerce Commission and Medsafe. Consumers rely on these products for claimed health or protective benefits, and if inaccurate this could endanger their health, and may pay more for a product that claims to be more effective, meaning it is an area where they can easily be misled.
A recent District Court case, Commerce Commission v Kiwipure Limited  NZDC 12149 was the first substantiation prosecution by the Commerce Commission contested by the counterparty in New Zealand. Kiwipure Limited was found guilty of making unsubstantiated claims about the health benefits and effectiveness of its magnetic water filtration system and fined $162,000. The Court made some helpful observations in relation to substantiation that are particularly relevant in the current climate:
- Representations concerning benefits to health require a far higher degree of substantiation than simply anecdotal evidence and/or limited research.
- Credence claims (claims which are difficult or impossible for consumers to evaluate or claims which can only be evaluated after purchase) also need to be sufficiently supported by research. For example, measurements or evidence of a reduction in washing powder was required to back up Kiwipure Limited’s claim that less washing powder was needed when using the device.
- The Commerce Commission does not have to undertake tests to check the accuracy of representations. The onus is on the trader, in making its representations, to ensure they are substantiated at the time they are made.
Third party advertising
While the primary obligation is on the manufacturer/seller to substantiate claims made in an advertisement, retailers or online platforms can also be liable for publishing an advertisement that contains an unsubstantiated claim.
It is unlikely that the NZCC will take action against a platform though, if it has relied on information provided to it by the advertiser to substantiate the claims that on its face seemed appropriate.
From a retailer’s perspective it is important to seek (and retain) documentation relied on by the manufacturer/seller to substantiate its product representations and claims. Importantly, the retailer should not be afraid to test the manufacturer so that it can be satisfied that the documentation and evidence are sufficient, robust and reputable enough to substantiate any claims made if there is any concern that they are not sufficient.
If products are promoted or used for surgical or medical purposes (including the prevention of COVID-19), they will be treated as a medical device and be subject to additional compliance obligations under the Medicines Act 1981 (Medicines Act), including product registration.
Before making a COVID-19 related claim or representation in an advertisement or in connection with the sale or supply of a product or service, we recommend that businesses:
- ensure that the advertisements do not make claims that the business does not have reasonable grounds for believing to be true. Claims such as “COVID-19 prevention supplies” are, for say a mask, inherently risky unless the mask is of an appropriate quality/functionality as the evidence for many types of mask is not be capable of being substantiated;
- ensure that the advertisements rely on facts, figures and credible sources of information (reliance should not be placed on guesses or unsupported opinions). For health related claims in particular, it is important to ensure that research results can be extrapolated, and scientific testing is conducted with qualified personnel interpreting results (such as appropriately involving expert opinion);
- keep records of any documentation or other information gathered in the process of sourcing or researching the products to verify that any claims made in the advertisements can be substantiated; and
- consider whether the product will be promoted or used for therapeutic, surgical or medical purposes as it may need to be registered as a medical device or a medicine under the Medicines Act).
If you have any questions, please contact one of our experts.
Chris Young heads MinterEllisonRuddWatts' Intellectual Property team. Anna Percy is a Solicitor in the Corporate IP/IT team.