Watchdog takes owner of Noni B, Katies to court over late deliveries

Mosaic Brands (ASX: MOZ), the fashion retail powerhouse behind such names as Noni B, Rivers and Katies, faces allegations that it breached Australian Consumer Law by failing to deliver several hundred thousand products to customers within advertised delivery times.

The Australian Competition and Consumer Commission (ACCC) has today commenced proceedings in the Federal Court alleging that between September 2021 and March 2022, Mosaic made false or misleading representations to consumers about delivery times which were generally two to 17 business days from the purchase date.

It is also alleged that Mosaic Brands - which also owns such brands as W.Lane, Rockmans, Autograph, Liz Jordan, Beme and Crossroads - wrongly accepted payment for goods during the same period, when it failed to deliver orders within the advertised timeframes, or within a reasonable timeframe, or not at all.

ACCC alleges that customers experienced excessive and lengthy delays during this time, where over 26 per cent of items ordered were dispatched from Mosaic Brands’ warehouses at least 20 days, and in some cases more than 40 days, after the purchase date.

“The ACCC has received hundreds of complaints about Mosaic Brands in relation to delivery delays,” says ACCC Commissioner Liza Carver.

“Excessively late deliveries can be incredibly frustrating and inconvenient for consumers, especially if they decided to buy goods for a special occasion, such as Christmas, based on the advertised delivery times which were not met.

“Consumer issues in domestic supply chains is a current ACCC enforcement priority.”

The watchdog also alleges that between September 2021 and October 2022, Mosaic Brands misrepresented consumer guarantee rights in the terms and conditions published on eight of its brands' websites when it stated that consumers were only eligible for a refund for a faulty product if they sought the refund within six months of the purchase date.

"If you buy a product or service and discover it is faulty, not of acceptable quality or does not match its description, you are entitled to a free repair and may also be entitled to a refund or replacement," says Carver.

"These legal rights are called ‘consumer guarantees’ under the Australian Consumer Law and they don’t have a specific expiry date."

The ACCC is seeking declarations, injunctions and penalties, as well as costs and other orders, including that Mosaic Brands implement a consumer law compliance program.  

The legal filings come shortly after Mosaic reported a 38 per cent lift in net profit after tax (NPAT) to $5.4 million for the December half, as well as a $13.5 million improvement in its net current assets over the six-month period.

Mosaic's first-half results news also coincided with the announced appointment of former The Iconic CEO Erica Berchtold as its new CEO, to replace outgoing head Scott Evans.

In other news involving the ACCC, a fine of $1.5 million was handed down to auto mechanic service centre company Ultra Tune last week, setting a new record as the highest for a contempt of court proceeding brought by the regulator.

The Federal Court found that Ultra Tune had breached orders to provide disclosure documents and marketing fund statements to franchisees in compliance with the Franchising Code.

The court also ordered Ultra Tune to implement a compliance program designed to reduce the risk of any future breaches.

In his decision, Justice Bromwich found that “…the evidence shows that the contempts that were charged were not out of character for Ultra Tune, but in fact a reflection of its corporate character which was insufficiently concerned with, and with effecting, compliance, even when it came to Court orders.”

“It is vital that franchisors prepare marketing fund statements in the timeframe stipulated by the Franchising Code, so that franchisees receive this important information when it is of most use to them,” the ACCC Commissioner said.

"“The ACCC took this action because it was concerned that Ultra Tune had failed to improve its compliance with the requirements of the Franchising Code despite previous ACCC action and court-imposed penalties. These fines for contempt demonstrate the importance of compliance with court orders.”