Lawyers pipe up over Pan product recall

AS the list of recalled products from Pan Pharmaceuticals keeps growing, lawyers get restless and shop turnovers fall, Western Australian retailers say they are hurting now and expect the pain to get worse.

Most believe the full extent of the Pan fallout will be felt in the coming months as rents fall due and turnover problems are exacerbated by reduced consumer confidence.

Retailers are dealing with a flood of enquiries over recalled products and the increased paper work the recall has caused. They are unsure what to do about refunds because most customers do not have proof of purchase and are waiting to see what will happen with the GST they have already paid on now-recalled stock.

At least two law firms – Hammond Worthington and Gadens Lawyers – are in preliminary discussions with retailers about possible group actions.

Health food shops have been hit hardest. One retailer told WA Business News that her shop’s turnover fell more than 50 per cent in the week the crisis hit.

Keep Healthy proprietor Anjum Hakim said the situation had seemed very bad when the recalled items were coming off the shelves and now it was hard to find replacement stock.

Retailers report that suppliers of products unaffected by the recall have been caught without stock because they operate on low inventories.

Despite poor sales they have had to take on more staff to deal with consumer enquiries about the product recall.

Good Life Health Stores Riverton owner Jilil Kamout said that while turnover had plummeted, he was being forced to have extra staff to deal with customer enquiries and paperwork that the recall had generated.

Pharmacists are not expecting to be hit as hard because non-prescription goods make up, on average, 30 per cent of their turnover, with vitamin and mineral supplements making up 1 per cent of that.

So far only one prescription medicine – the anti depressant Allegron – has been recalled.

Pharmacy Guild of Australia acting national president and WA guild official, Harry Zafer, said the impact on pharmacies would vary depending on their market.

“In those areas where there is a high demand for complementary medicines the impact will be huge,” he said.

“I think the repercussions of this will only be fully felt in the medium term.”

Mr Zafer said pharmacists also had to deal with floods of people seeking advice about recalled products.

Independent Grocers Association president John Cummings said the Pan situation had “minimal” impact on his members.

He said complementary medicines were a tiny fraction of the products that supermarkets carried.

“As yet we have not had any consumers who have returned any,” Mr Cummings said.

The GST is another issue lurking in the background as shopkeepers try to keep a lid on consumer panic.

An Australian Tax Office spokeswoman said most affected businesses would have to make adjustments for recalled stock on their next Business Activity Statement and could phone 13 28 66 for advice.

Refunds have been a major concern for a number of retailers because people are coming to them with partly used stock asking for a full refund with no proof of purchase. Their suppliers are also split on how they will handle the recall.

The WA Government has made it clear that all consumers who have purchased now-recalled products can return them to the retailer for a full refund. A register has been established for people waiting to get their money back.

A spokesman for the Department of Consumer Protection said the register held about 150 names and so far the department had received a further 250 enquiries.

The spokesman said that proof of purchase was not a legal requirement and in a release last month Consumer Protection commissioner Pat Walker said consumers were entitled to a full refund even if they had opened the packaging or used some of the product.

Mayne, which has brands such as Cenovis, is giving retailers credit on recalled stock and has also set up a hotline to help consumers get a refund.  However, some retailers say that some suppliers of other recalled products will only offer replacements.

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