Federal Court orders e-cigarette companies to pay penalties for misleading claims

The Federal Court has ordered three online e-cigarette retailers to pay penalties for breaching the Australian Consumer Law.

Federal Court orders e-cigarette companies to pay penalties for misleading claims

The three retailers The Joystick Company Pty Ltd (Joystick), Social-Lites Pty Ltd (Social-Lites) and Elusion Australia Limited (in liquidation) (Elusion) to pay penalties for breaching the Australian Consumer Law.

The ACCC understands that this is the first time any regulator globally has successfully taken action for false and misleading claims about the presence of carcinogens in e-cigarettes.  

The Court also found that the directors of Joystick and Elusion, and the CEO of Social-Lites, were knowingly concerned in the contravening conduct of their respective companies by making representations that their products did not contain harmful carcinogens and toxins, when this was not the case.

Following admissions made by each of the companies and individuals and joint submissions on penalties, the Federal Court ordered that:

  • Joystick pay a pecuniary penalty of $50,000, and its director a penalty of $10,000;
  • Social-Lites pay a pecuniary penalty of $50,000, and its CEO a penalty of $10,000, and;
  • Elusion pay a pecuniary penalty of $40,000, and its director a penalty of $15,000.

“Consumers were led to believe by this conduct that when using these e-cigarette products, they would not be exposed to the harmful chemicals found in ordinary cigarettes,” ACCC Acting Chair Delia Rickard said.

“In fact, they were exposed to the same chemicals, including a known carcinogen that has no safe level of exposure.”

“Businesses must ensure that they provide accurate information to customers, and have a reasonable basis for making any representations. This is particularly important for products that may cause harm to the health of consumers,” Ms Rickard said.

The ACCC has written to over 30 Australian e-cigarette suppliers reminding them of their ACL obligations, in particular to ensure information provided to consumers is accurate.

Independent testing commissioned by the ACCC identified the presence of carcinogens and toxic chemicals, such as formaldehyde, acetaldehyde and acrolein in the products of Joystick, Social-Lites and Elusion, as well as acetone in Social-Lites’ products.

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