Unsafe pyjamas to cost Cotton On $1m

Clothing retailer Cotton On Kids has been fined $1 million for selling children's pyjamas which breached fire safety standards.

Justice Richard Tracey ordered Cotton On Kids to pay $1 million to the Commonwealth of Australia in the Federal Court on Tuesday, following action from the Australian Competition and Consumer Commission (ACCC).

Cotton On Kids supplied about 2500 girls' night dresses and pyjamas, which breached fire safety standards between September and December 2010.

Cotton On Kids and its parent company, Cotton On, voluntarily recalled the clothing after a notice from the ACCC.

Justice Tracey also found the items were incorrectly fitted with a tag reading "Low Fire Danger".

ACCC deputy chair Delia Rickard said the breaches were serious and placed a vulnerable class of consumers at risk.

"The nightwear was so flammable that they should not have been supplied in Australia at all," she said in a statement.

She urged any customers of Cotton On Kids who may have purchased the night dresses or pyjamas to immediately stop using them and return the items for a refund.

The penalty is the highest imposed against a company for breaching the mandatory product safety standard, according to the ACCC.

Cotton On co-operated with the ACCC and the parties had agreed to the penalties and proposed orders before the hearing.

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