City Beach has lost its bid to overturn a $14 million penalty imposed for selling tens of thousands of products that failed to meet Australia’s mandatory button battery standards.

The Full Federal Court dismissed an appeal by Fewstone Pty Ltd, which trades as City Beach, finding the $14 million penalty was not manifestly excessive.

The original penalty was imposed in December 2025 after the Federal Court found City Beach had sold more than 60 types of non-compliant button battery products on more than 54,000 occasions between June 2022 and October 2024.

Products involved included toys, digital notepads, keyrings, lights and light-up Jibbitz accessories for Crocs shoes. Many were marketed to or intended for children.

City Beach had admitted that its conduct breached the Australian Consumer Law but appealed against the size of the penalty.

In dismissing the appeal, the Full Federal Court highlighted the importance of deterrence when products present serious safety risks, noting that an appropriate penalty does not necessarily need to reflect the profit generated from selling a dangerous, low-cost product.

The Australian Competition and Consumer Commission welcomed the decision, saying it reinforced the need for retailers to have appropriate compliance systems in place.

“The Court has today confirmed that a significant penalty is appropriate in this case to deter City Beach and other traders from failing to comply with the mandatory button battery standards,” ACCC Commissioner Luke Woodward said.

Australia’s mandatory button and coin battery standards came into effect in June 2022 following an 18-month transition period.

Products containing button batteries must have secure battery compartments designed to prevent young children from accessing them. Suppliers must also provide prescribed safety warnings, including information about seeking urgent medical assistance if a battery is swallowed or inserted.

Button batteries present a particular danger to young children. If swallowed, they can become lodged in the throat and cause severe internal injuries in a short period. Batteries inserted into the ears or nose can also cause serious injuries.

Three children have died in Australia following button battery incidents.

The ACCC advises parents and carers to seek immediate medical attention if they suspect a child has swallowed or inserted a button battery, as severe or fatal injuries can occur within two hours.

The $14 million order was the first penalty imposed for breaches of Australia’s mandatory button battery standards and will remain in effect following the unsuccessful appeal.

City Beach operates an online store and 66 retail locations across Australia, primarily selling surf and skate clothing, accessories and novelty products.

The retailer is conducting a voluntary recall of affected products, with customers able to return recalled items to City Beach for a full refund.

The ACCC said the outcome should serve as a warning to other retailers and suppliers that failing to comply with mandatory button battery requirements could result in substantial penalties.