29 April 2016
Today the Federal Court handed Reckitt Benckiser, the company that makes Nurofen, a fine of $1.7 million for misleading consumers with targeted pain relief products that didn't target pain.
Consumer advocacy group CHOICE says Nurofen's $1.7 million fine for making dodgy targeted pain reliever claims does not give Reckitt Benckiser enough financial pain. The consumer group's call for bigger penalties comes with the review of Australian Consumer Law later this year.
"These massive global companies should be made to pay fines that fit the crime," says Tom Godfrey, CHOICE head of media and spokesperson.
"The law needs to be changed so that courts can and will issue penalties that give companies a real headache."
"Reckitt Benckiser sold these dodgy products for years. CHOICE first called the company out for its deceptive claims by awarding Nurofen a Shonky six years ago in 2010."
"A $1.7 million fine is nothing compared to the profit Reckitt Benckiser would have made from tricking customers into paying a premium for products that weren't any more effective than cheaper generic pain relief pills. Even the highest available fine under the law would have only been $6 million, which is pocket change for these giant companies," says Mr Godfrey.
Penalties are capped at a maximum of $1.1 million when a company breaches provisions relating to consumer protection and misleading advertising of the Competition and Consumer Act (2010). Penalties can be as high as $10 million per breach if a company breaches other sections of the same act.
"It's time to update our consumer protection laws so that the courts can hand down fines that match the size of the company and the dodginess of the behaviour. In the upcoming review of the Australian Consumer Law, CHOICE will be calling for penalties to be dramatically increased."
"If a $10 million per breach penalty had been available in this case, like it is available under parts of Competition and Consumer Act, Reckitt Benckiser could have been facing a more appropriate fine of $60 million. This kind of fine is needed to send a clear signal to big business that there is no profit to be made in deceiving consumers," Mr Godfrey says.
While the company claimed that each product was formulated to treat a particular area of pain, they in fact all contained the exact same active ingredient of ibuprofen lysine 342mg.
The Federal Government is currently conducting a review into Australia's consumer law framework. Submissions to the issues paper are due on 27 May 2016.