On 26 February 2019 the ACCC released its Compliance and Enforcement Policy and Priorities for 2019. The policy outlines what the ACCC aims to focus on this year. It ranges from Cartel Conduct to Customer Loyalty Schemes, encompassing a wide range of issues that can affect businesses and consumers alike.
As the independent Commonwealth statutory authority which enforces the Competition and Consumer Act 2010 (Cth) and a range of other legislation with the aim of promoting competition and fair trade in markets, the ACCC’s priorities list is always a good read to not only keep abreast of the ACCC’s priorities but to also assess whether your business is complying with a myriad of important laws which govern businesses.
Shavin Silva, Associate Lawyer, looks at a few of these priorities and provides his thoughts on steps businesses can take to mitigate their risk of breaching applicable laws.
Customer Loyalty Schemes
Loyalty schemes are used by many businesses and consumers and the ACCC is examining these schemes as a new priority. The ACCC will be examining how the data gathered is used by the companies, what disclosure of the usage is made and importantly whether consumers receive the promised benefits.
ACCC Chair Rod Sims said in a speech to the annual Committee for Economic Development Australia, “While these customer loyalty schemes are ubiquitous across many sectors, questions arise about whether consumers are being properly informed and receiving the benefits touted by many of these programs.”
Customer Loyalty Schemes – a few takeaways for businesses
- Review your terms and conditions and get them up to date to ensure that customers have been kept appropriately informed in relation to the collection and use of their information and have also consented to the same.
- Ensure that advertisements and promotions of loyalty schemes are accurate.
Consumer guarantees and product safety
The ACCC had a number of significant victories in 2018 in relation to consumer guarantees and product safety. In particular, judgments against Apple Inc. to pay $9 million in penalties for false/misleading representations and against Ford for engaging in unconscionable conduct.
The Commonwealth Parliament also passed a law which increased the maximum penalties for contraventions of the Australian Consumer Law in 2018. The maximum penalty for each contravention for a body corporate is now the greater of $10 million, or 3 times the value of the benefit that the body corporate has obtained directly or indirectly and that is reasonably attributable to the commission of the offence (if the Court can determine the value of the benefit) or, where the benefit cannot be calculated, 10% of the annual turnover of the body corporate during the 12 month period ending at the end of the month in which the body corporate committed, or began committing, the offence.
The ACCC remains concerned that large retailers and manufacturers that ‘supply high value consumer goods, including whitegoods and electrical goods’ do not comply with consumer guarantee laws.
Consumer guarantees and product safety – a few takeaways for businesses
- Given the new penalty regime and comments made in the Royal Banking Commission Report, we anticipate that the ACCC will be more aggressive in pursuing matters in court and seeking judgments against offending companies.
- It is very important the businesses inform themselves of the provisions of the Australian Consumer Law, in particular with respect to guarantees.
- Businesses should review their terms of trade to ensure compliance with the Australian Consumer Law.
Unfair Contracts Further Developments
The ACCC has taken action against businesses for unfair contract terms since these provisions came into effect. The current regime requires that a Court find that a term of a contract is unfair which will then lead to an order that the offending term is void and unenforceable. The mere presence of an unfair contract term does not trigger a penalty.
As ACCC Chair Rod Sims stated:
This provides a number of challenges for an economy wide enforcement agency. Businesses have low incentives to change their behaviour absent sanctions, knowing that if questioned, they can quickly agree to change their contracts and move on. In effect the ACCC becomes the compliance department for these businesses, which is what we never want to be.
The point here is that compliance with the law must be the responsibility of all firms; the ACCC’s role is both in general education and in enforcement action to encourage this compliance.
Thus, the ACCC is advocating for penalties to be established for the mere inclusion of unfair contract terms in standard form contracts.
Unfair Contracts Further Developments – a few takeaways for businesses
- All businesses should inform themselves of their obligations under the Australian Consumer Law with respect to unfair contract terms and should ensure their terms of trade do not breach the Australian Consumer Law.
It has never been more important for businesses to be aware of their obligations to consumers and small businesses and to keep on top of their terms of trade to ensure compliance with the law.
For more information on unfair terms, contracts and commercial law in general please contact Shavin on (08) 8410 9294 or via email with this form.