Reference no: EM133513487

Crafty Chocolate Company ('Crafty') has developed a new type of chocolate which they claim causes weight loss. The product is called 'Chocoslim'. Crafty has developed a series of television infomercials that are run during morning and daytime talk shows, and also a print advertising campaign, both of which prominently feature the statement: 'This chocolate actually makes you lose weight. Eat as much as you like and you'll STILL lose weight - the more you eat the more you lose!'. The advertisements also state that the product has been scientifically formulated to give the maximum weight loss benefits and include photographs of a laboratory technician with some scientific equipment to support this claim. 'Before and after' photographs of persons who claim to have lost large amounts of weight by eating Chocoslim appear in both campaigns along with the statement: '95% of our customers lost 7-10kg in the first month of using Chocoslim!'. The television infomercials also include interviews with satisfied customers. It turns out that the 'satisfied customers' are really actors who have been told what to say, and the 'before and after' photographs have been artificially altered to look as though the subjects have lost weight. Nevertheless, the advertisements work well and Crafty is flooded with orders for Chocoslim. However, after several weeks have passed, customers start complaining that they are not losing weight and in fact most have gained weight, in some cases quite dramatically. Other businesses specialising in weight loss supplements are also unhappy about Crafty's advertising. Tom has purchased a carton of the Chocoslim product for $550 from Weight for Me Pty Ltd (WFM) - an online supplier who sells various weight loss supplements including Chocoslim. When Tom hears about the 'scam' on Facebook, he seeks a refund from WFM, but they refuse to give him one on the grounds that he has to get the refund from Crafty, and not from the 'supplier' / retailer from whom he bought the product. WFM also tells Tom that he would, in any case, have to return the carton to them unopened (in its original packaging) first. Tom does not have the original packaging any more.

1. Could the ACCC successfully sue Crafty for misleading or deceptive conduct; for false or misleading representations? Why or why not?

2. Is Tom entitled to a resund? Why or why not.