Consumer law amendments bring greater clarity and enhance regulators' powers25 October 2018
The Treasury Laws Amendment (Australian Consumer Law Review) Bill 2018 (Amendment Act) cleared its final hurdle last week—passing the Senate—and, with the aim of clarifying and strengthening consumer protections, paves the way for a raft of amendments to the Australian Securities and Investments Commission Act 2001 (ASIC Act), the Australian Consumer Law (ACL), and the Competition and Consumer Act 2010 (CCA).
The Amendment Act brings into law a number of the recommendations of the review of the ACL by Consumer Affairs Australia and New Zealand (completed in April 2017) to ensure consumers are well-informed, and that consumers and traders better understand their rights and obligations under Australia’s consumer protection laws.
Summary of the changes
In summary, the amendments are as follows:
- permitting a private litigant to rely on admissions of fact and findings of fact made in other proceedings
- extending the unconscionable conduct protections to publicly listed companies
- clarifying that the unsolicited services provisions extend to services that are unrequested and not actually supplied
- clarifying that an unsolicited consumer agreement may be entered into in a public place
- requiring that fees or charges associated with pre-selected options must be included in the headline price
- strengthening the powers of the Minister and the regulator to obtain information about product safety, including from third parties
- broadening the regulators’ investigative powers to allow investigation of possible unfair contract terms
- empowering the Courts to require a person found to have contravened the ACL to engage a third party to give effect to a community service order
- clarifying the scope of the consumer guarantees in relation to goods that are transported or stored, to provide that the exemption from the requirement to provide a consumer guarantee for the transport or storage of goods only applies where the consignor and consignee are a business
- bringing consistency to the consumer protection terminology in the ASIC Act and the ACL in relation to land, and
- clarifying that the ACL consumer protections applying to financial services also apply to financial products under the ASIC Act.
Some of the more significant amendments are outlined further below.
Single pricing to include all pre-selected options
The ACL requires that, in connection with the promotion or supply of goods or services, a person must not state an amount that would constitute a part of the price for those goods or services unless also specifying the single price as a single figure with at least the same prominence as the part price—the single price being the minimum quantifiable consideration for the supply at the time.
Currently, the headline price does not need to include an optional charge. This has resulted in cases (particularly online) where the additional cost of pre-selected options has not been included in the total price stated to the consumer and, unless the consumer actively de-selects those options, they are charged an amount higher than the headline price. The example given is an airline advertising a flight for a certain price but the online booking system includes a pre-selected carbon offset charge on top of the advertised price.
The single pricing provision in the ACL will require that a seller mentions that it has applied an optional charge automatically in the headline price, even if the consumer is able to deselect the relevant option during the transaction. In the example above, if the airline pre-selects the carbon offset charge on its booking system, then it must include that charge in its advertised headline price even if the consumer is able to de-select the option during the booking process. If the option is deselected, then the price displayed may reduce accordingly.
Strengthening the ACCC’s power to obtain product safety information
Currently, the CCA gives the Minister or an Australian Competition and Consumer Commission (ACCC) appointed inspector the power to obtain information about the safety of goods or services from the supplier of those goods or services. However, often relevant and important information is held by third parties from whom the regulator is unable to compel production. Such information might be held by other traders, consumers, consultants and test laboratories.
The power will now be broadened to provide the ability for the Minister or inspector to obtain information from a third party where they have reason to believe the recipient is capable of giving information, documents, or evidence in relation to the safety of consumer goods or product related services.
Broadening the regulators’ powers to investigate and assess unfair contract terms
The ACL and the ASIC Act contain provisions that make a term of a standard form consumer contract or small business contract void if it is unfair. As the provisions merely void the relevant term and are not legal prohibitions on unfair contract terms, contracting an unfair term is not a breach of contravention of the law, and the regulators have limited ability to investigate compliance with these provisions and to take related enforcement action.
For contracts entered into after the amendments come into effect, ASIC and the ACCC will have new powers to investigate consumer contracts and small business contracts, to determine whether it is necessary to bring proceedings to have the relevant contract term declared unfair by the court.
These amendments demonstrate the Federal Government’s ongoing commitment to enhancing consumer protection laws and supporting the work of the regulators. Businesses can expect to see increased activity by the regulators as a result, particularly in relation to single pricing and unfair contract terms.
Additional note—NSW Government’s Better Business Reforms
In addition to the updates above, this week on 24 October, the Fair Trading Legislation Amendment (Reform) Bill 2018 passed both houses of parliament and is currently awaiting assent. The Bill will amend the Fair Trading Act 1987 (NSW) and the Fair Trading Regulation 2012 (NSW), and aims to ensure consumers are provided with the information they need while cutting the “red-tape” for small businesses.
The amendments will:
- enable the Commissioner for Fair Trading to publish certain information about licence holders and traders on the internet for free public access
- require suppliers to notify consumers about substantially prejudicial terms relating to the supply of goods or services and to disclose the existence of commissions and referral fees
- enable the regulations to prescribe information standards for the supply of goods or services and to create an offence for non-compliance with any such standard, and
- prevent non-disclosure agreements from limiting the information that may be provided to the Commissioner about complaint relating to the supply of goods or services.