Mosaic (ASX:MOZ) admits dodgy ads on hand sanitiser, masks

Retail conglomerate pays $630,000 penalty for making false claims about its COVID-19 personal protective products.

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Retail giant Mosaic Brands Ltd (ASX: MOZ) has paid a $630,000 penalty after admitting to making misleading claims on advertising for hand sanitisers and face masks.

Mosaic runs more than 1200 clothing stores across Australia under brands such as Katies, Millers, Rivers, Noni B, Autograph and Rockmans.

The Australian Competition and Consumer Commission (ACCC) announced Thursday that the company had confessed to breaching Australian Consumer Law (ACL) with misleading advertising for its "Health Essential" hand sanitisers and protective masks.

The alleged offences occurred at the height of the first wave of COVID-19 in Australia between March and June 2020.

NoniB's sanitiser claimed 70% alcohol content, Millers' sanitiser claims 75% and another sold online claimed they were "WHO-approved". None of these claims were true.

"Independent testing of the hand sanitisers commissioned by the ACCC found that one of the sanitisers tested contained an alcohol content of 17% and another had an alcohol content of 58%," said ACCC deputy chair Delia Rickard.

"This was also below the minimum 60% alcohol concentration recommended by Australian health authorities."

Mosaic also advertised its KN95 Kids Safety Masks as "CE/FDA certified" and that KN95 Adult Face Masks were "non-refundable". Both these claims were false.

"Our investigation also found that Mosaic Brands' Kids KN95 mask was not certified by European and US standard authorities as they had advertised," said Rickard.

Mosaic did not respond to The Motley Fool's request for comment. The Mosaic share price was down 1.47% on Thursday afternoon, to trade at 67 cents.

Mosaic's 'outrageous' ads designed to 'make a quick buck'

Consumer advocacy body Choice originally tipped off the ACCC to investigate Mosaic.

According to Choice campaigner Dean Price, the company is now paying the price for misleading the public at the height of health fears.

"It's never ok to make a quick buck by misleading people and Mosaic Brand's actions were particularly outrageous when people were doing their best to protect themselves from a deadly pandemic," he said.

"This action by the ACCC is a win for people and a reminder to businesses that they cannot get away with misleading consumers."

Mosaic would have got away with it if it weren't for the actions of one person.

"A supporter tipped us off that they didn't think the hand sanitiser they bought from Mosaic Brands was up to scratch," Price said.

"Independent testing that was funded by Choice supporters confirmed their suspicion and led us to make a formal complaint to the ACCC."

Refunds for customers

In addition to paying the fine, Mosaic has entered a court-enforceable undertaking that it would refund customers who bought the affected COVID protective gear.

The company will identify and contact customers who bought the products to offer a refund — even those who previously were refused.

The undertaking also compels Mosaic to execute a 3-year program of ACL compliance.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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