DARWIN, AUSTRALIA—Authorities have compensated an Australian man $100,000 after he was wrongly accused of trying to smuggle drugs into the country in bottles of shampoo.

Neil Parry of Darwin spent three days in jail last year after he was arrested at Darwin Airport and accused of trafficking liquid ecstasy. His boat and two friends’ houses were searched.

But his two bottles of Pantene Pro-V shampoo and conditioner contained exactly what the labels said.

Australian Customs and Border Protection said in a statement Monday that there were “mistakes made during the presumptive testing of Mr. Parry’s goods” and additional procedures have been introduced when conducting drug tests.