Dulux has been ordered to pay a pecuniary penalty of $400,000 for advertising misleading claims that paint products reduced the interior temperature of homes in Australian Competition and Consumer Commission v DuluxGroup (Australia) Pty Limited (No 2)  FCA 1286.
In the final proceedings to the action brought by the ACCC against DuluxGroup (Australia) Pty Limited (Dulux), the Federal Court has ordered that Dulux engaged in misleading or deceptive conduct and made false or misleading representations in relation to two types of paint, InfraCOOL roof paint and Weathershield Heat Reflect exterior wall house paint, when Dulux were unable to substantiate these claims and therefore did not have reasonable grounds to make such claims.
Claims made by Dulux
Dulux made various claims about the cooling performance benefits of these two products on promotional material in-store, on colour cards and on paint tins, on Dulux webpages including their Facebook and website, in major regional newspapers across Australia, and in television and magazine advertisements.
The products were claimed by Dulux to differ to standard roof paint and standard exterior paint as the standard paints did not include pigments which reflected infrared radiation. The specific cooling performance representations claimed were:
- That the Dulux InfraCOOL paint could and would:
- reduce the interior temperature of the living zones of a house by 10°C;
- significantly reduce the energy consumption costs associated with a house; and
- significantly reduce the carbon footprint, or environmental effect, associated with a house by reducing energy consumption costs associated with a house.
- That the Dulux Weathershield Heat Reflect paint could and would:
- reduce the surface temperature of the external walls of a house by up to 15°C;
- significantly reduce the interior temperature of a house; and
- significantly reduce the energy consumption costs associated with a house.
Australian Consumer Law
Section 18 of the Australian Consumer Law, found at Schedule 2 to the Competition and Consumer Act 2010 (Cth), (ACL) provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 29(1)(i) of the ACL provides that a person must not, in trade or commerce, in connection with the supply or promotion of goods or services, make a false or misleading representation that goods or services have performance characteristics, accessories, uses or benefits.
In order to ensure that a business does not breach section 18 or 29, any claims in advertisements need to be substantiated through evidence. Evidence must be recent, robust, relevant, objective, proximate (i.e. recent), must directly support the claims and take-outs, and originate from a reputable source with a degree of independence to ensure that the claims can be substantiated. If this is not achieved, then a false impression may be created, false or inaccurate claims may be made, important information may be omitted, and consumers may be lead to a wrong conclusion which may amount to a breach of sections 18 and 29 of the ACL.
Evidence relied on
Dulux were unable to prove that they had reasonable grounds to make the representation regarding the cooling performance characteristics of their products. During the proceedings, Dulux admitted that it did not have reasonable grounds in which to make the claims regarding the InfraCOOL product as, although some tests were conducted, particularly tests on the exterior surface temperature and work area beneath the roof, it did not conduct or obtain any studies or tests on the effect of the InfraCOOL product on interior temperatures. In relation to the Weathershield Heat Reflect exterior wall house paint, whilst some tests were conducted which assessed the performance characteristics of the paint, and academic articles regarding heat reflective paint were consulted, Dulux did not carry out any tests which could show that use of the Dulux product actually reduced room temperature when compared to standard paint.
The Federal Court found that Dulux’s conduct amounted to the “lower to middling range of seriousness“. In addition to Dulux being ordered to pay a pecuniary penalty of $400,000 and contribute to ACCC’s costs, the Court ordered publication orders that Dulux correct the misleading advertising on their website and in The Australian newspaper. Dulux also gave the following undertakings to the Court that for three years, whether by itself, its servants or agents, that it would represent, in trade or commerce, that:
(A) applying heat reflective paint to the roof of a house can reduce the interior temperature of the living zones of that house by up to 10 degrees Celsius;
(B) applying heat reflective paint to the exterior walls of a house can and will reduce the surface temperature of those walls by up to 15 degrees Celsius; or
(C) applying heat reflective paint to the exterior walls of a house can and will significantly reduce the interior temperature of that house;
(D) has reasonable grounds for making the particular representation; and
(E) clearly and prominently explains the environmental, structural and other factors that may reduce the effect of applying heat reflective paint to a normal house in realistic conditions.
Implications for advertisers and brands
Agencies and brands need to ensure that any claims made in advertising can be substantiated through appropriate evidence. Such evidence must be recent, robust, relevant, objective, must directly support the claims and take-outs, and, depending on the nature of the claims, originate from a reputable source to ensure that the claims can reasonably be substantiated. Consumer law compliance can often be assisted through disclosures made in the advertising itself, including by way of carefully prepared elucidators that appropriately inform consumers.