Lorna Jane is being taken to court by the consumer watchdog who says the popular activewear brand falsely claimed its clothes could eliminate COVID-19 and stop it spreading.
The company in July claimed its anti-virus activewear had been sprayed with a substance called 'LJ Shield' which protected people against pathogens.
Advertisements on the brand's website, stores and on Instagram used the tag "Cure for the Spread of COVID-19? Lorna Jane Thinks So".
The Australian Competition and Consumer Commission (ACCC) on Monday launched federal court legal action against Lorna Jane for allegedly making false and misleading claims.
ACCC Commissioner Sarah Court said it was "particularly concerning" the claims were made at a time when there were fears of a second wave in Australia, especially Victoria.
"We allege the statements made by Lorna Jane gave the impression that the COVID-19 claims were based on scientific or technological evidence when this was not the case," Ms Court said.
"We are particularly concerned about this because consumers often trust well-known brands and assume that their marketing claims are backed up by solid evidence."
Lorna Jane in July copped an almost $40,000 fine from the Therapeutic Goods Administration for failing to seek correct approval for the ads.
Other lines on ads included "With Lorna Jane Shield on our garments it meant that we were completely eliminating the possibility of spreading any deadly viruses".
Lorna Jane said it has assisted the ACCC with its investigation and is extremely disappointed about the legal action.
"We will be defending ourselves in the Federal Court against the commission's allegations," a spokeswoman said in a statement.
The ACCC says most of the claims were removed in mid-July but tags on clothing continued to contain the pathogen protective claims until November.
It is also alleged company director Lorna Jane Clarkson was "knowingly concerned" in the conduct and made false or misleading claims about the activewear in a media release and video.
Lorna Jane has 108 stores in Australia, plus several overseas, including in the USA and New Zealand.