In a speech to lawyers on Friday night, the chairman of the ACCC said that 2 areas of their focus are energy retailers and in particular on claims of discounts and savings available to customers and on the making of credence claims, particularly by the food industry. This includes claiming attributes such as “Australian made”, ”organic”, “baked today” , or making some other claim that implies or asserts that products are superior to those of a competitor.
The reasons behind this are that consumers are placing an increasing value on premium claims but are not able to check every claim.
Credence claims are often called “greenwash” when companies claim false environmental benefits. Credence claims give suppliers a competitive advantage and if claims are false or misleading, the supplier that is genuinely providing a premium product can be disadvantaged. The overuse of misleading credence claims can also lead to skepticism in consumers and tarnish the companies that are doing the right thing and making genuine, credible and verifiable claims.
When claiming features or benefits of a product or its manufacturing process that are directed to distinguishing it as a premium product, or claiming discounts or savings, suppliers must be careful to:
- review the claims in their context;
- ensure the reader/listener will understand the claims as intended;
- make sure the claims are accurate and true; and
- be able to substantiate them
This can be assisted by designing and implementing a compliance program to:
- identify the benefits of the company’s products and processes;
- assess the risks of making misleading claims;
- manage the process for how and where claims are made;
- maintain a verification process; and
- raise employee understanding of the risks of making misrepresentations.
Compliance programs should be tailored to the particular type of business and identify its specific legal risks. Taking the time to design them can save money in avoided penalties and save tying up human resources unnecessarily.