Counterfeit cosmetics. Photo from The NSW Department of Fair Trading

Whether its cosmetics or electrical goods, suppliers have a responsibility for consumer protection and  consumers have a responsibility for their own protection.

Counterfeit make-up causing injury

The NSW Department of Fair Trading has been investigating and following up on complaints about counterfeit MAC branded make-up products being sold in Sydney which have injured one consumer and, once opened, were clearly of a quality less than expected of MAC cosmetics.

Consumers might think they are getting a good deal and unscrupulous sellers are taking advantage of this but sellers of counterfeit products, such as cosmetics are breaking a number of laws, including:

• infringing the trade marks rights of the legitimate owner and users of the trade marks;
• engaging in misleading and deceptive conduct and making false representations in breach of the Australian Consumer Law;
• failing to comply with mandatory safety and information standards.

Consumers may be at risk, among other things because:

• the source and quality of the ingredients is unknown;
• the manufacturing processes may not be of a safe standard;
• the ingredients may be different to those of the genuine article and those listed on the mandatory ingredient label;
• the goods may be contaminated with chemicals or bacterial agents;
• claims relied on consumers, such as SPF ratings, may be wrong.

Cheap, non-compliant electrical goods seized

The NSW Department of Fair Trading last week also provided an update on the ongoing audits and seizures of electrical goods in the market place that fail to comply with electrical product safety laws. The Department has visited over 930 shops throughout NSW, seized over 1300 electrical items and over 10% have been found not to comply. The goods being inspected and seized are predominantly device chargers and adapters.

The Department is  considering whether to prosecute 2 traders and 13 others are likely to be issued with penalty infringement notices.

The cost to the retailer

Retailers who fail in their consumer protection responsibilities and  engage in false or misleading conduct can be fined under the Australian Consumer Law up to $1.1 million for a company or $220,000 for an individual.

They can also be given on-the-spot infringement penalty notices and fines and can be required to implement a compliance program and training for staff.

The penalties for failing to comply with electrical safety laws range from $500 for on-the-spot fines to $87,000 and /or 2 years imprisonment for an individual or $875,000 for a company.

Sellers of non- compliant goods may also be sued for damages and end up paying the costs of trade mark owners (if selling counterfeit goods), the ACCC and any consumers who are injured as a result of their conduct.

Sellers have obligations to their customers

Retailers who decide to “cheat” and sell fake products do much more than hurt the legitimate owner or user of a trade mark . Their conduct can cause injuries to consumers, these can often be serious.

Retailers and others in the supply chain need to be aware of their legal obligations as far as making claims and their conduct towards consumers, in particular consumer protection.

Consumers need to be aware that often if a bargain seems too good to be true, it is too good to be true and the real price is more than the cost of paying more for legitimate goods.

Genuine goods generally have the support of legitimate manufacturers and sellers who value their brand and reputation. Manufacturers follow good manufacturing practices and both the manufacturers and retailers should have sound compliance programs in place to ensure the correct laws are followed and unsafe goods can be traced. It’s also often easier to obtain remedies through the regulators and Courts if a “legitimate” seller fails to comply with the law.