Fair enough? The new unfair trading practices regime and what consumer-facing businesses must do before 1 July 2027

The Australian Competition and Consumer Commission has long argued that gaps in the existing consumer protections in the Australian Consumer Law allow trading practices that harm consumers and small businesses through manipulation and distortion.

The Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 became law on 2 July 2026. When it takes effect from 1 July 2027, trading conduct that may not currently breach the Australian Consumer Law protections will become unlawful where it manipulates or unreasonably distorts consumer decision-making.

The new prohibition on ’unfair trading practices’

It will be unlawful for a person, in trade or commerce, to engage in ’unfair trading practices’. This is conduct, in connection with the supply of (or an offer to supply) goods or services to a consumer, that:

• manipulates, or is likely to manipulate, the consumer, or
• unreasonably distorts, or is likely to unreasonably distort, the environment in which the consumer makes, or is likely to make, a decision,

and causes, or is likely to cause, detriment (whether financial or not) to the consumer.

The terms ’manipulate’ and ’unreasonably distort’ are intended to capture wrongful interferences with the consumer that change their behaviour, their decisions, or their actions in a way that is against their interests. However, the terms are undefined and so their precise scope will remain uncertain until they have been interpreted by the courts.

The law points specifically to conduct that impedes the consumer’s ability to exercise their legal rights or seek legal remedies, to failure to disclose material information, to disclosing material information in a complex, ineffective, unclear, unintelligible, ambiguous, untimely, or overwhelming way, and to conduct that creates an environment that puts the consumer under unreasonable pressure or obstructs them from making or fulling their decision.

The sort of manipulation and distortion that the law is aimed at is the use of common cognitive or behavioural biases that change consumer behaviour, rather than legitimate and reasonable marketing practices. Some examples of conduct that could breach the new law including the following:

• Countdown timers and similar mechanisms that generate a false sense of urgency or scarcity during an online purchase flow, for example ’Only 1 left’ or ’10 people are viewing this now’. Such mechanisms work on the consumer’s fear of missing out, rather than legitimately providing them with information, and drive consumers to make rushed purchasing decisions, without taking the opportunity to reflect and compare prices, ultimately causing them to pay more.
• ’Confirmshaming’, where the decline option in an online purchase flow is designed to induce guilt or embarrassment, for example ’No, I don’t want to save money’. This works by exploiting biases to pressure the consumer into making a choice that they otherwise would not make.
• Cancellation friction, where the business makes the sign-up process simple but the process for cancelling a service particularly difficult or tedious, for example by allowing the consumer to sign-up online but requiring that they make a telephone call during business hours to cancel the service, or by forcing the consumer through multiple ’are you sure’ loops in an online cancellation process. This sort of engineered friction results in consumers abandoning their decision to cancel the services, with the result that they continue paying for something they no longer want.

Because of the uncertainty in the precise scope of the new prohibitions, and particularly the intention that they do not extend to legitimate and reasonable marketing practices, we expect that most litigation around the new prohibition will focus on whether the marketing techniques used are really exploiting the consumer’s behavioural biases to their detriment or are genuinely informing the consumer and ’selling’ the product.

Businesses will be aware that a ’consumer’ transaction, for the purposes of the Australian Consumer Law, is not limited to an ordinary retail transaction for personal or domestic products but extends to acquisitions or goods or services for $100,000 or less, regardless of whether the consumer is an individual or a business, and regardless of whether the purchase if for business or personal use.   

However, the new prohibition on unfair trading practices will not, at least as it is currently framed, extend to supplies to a consumer that is a body corporate, nor to supplies in the course of the consumer carrying on a business. 

On 3 June 2026, the Treasury released a consultation paper considering the extension of the unfair trading practices prohibition to small business and franchisee transactions. Submissions closed on 10 July 2026. Treasury has proposed that a small business acquiring goods or services receive the same protections from unfair trading practices as an individual consumer, with ’small business’ to be defined consistently with the existing unfair contract terms regime to capture businesses with fewer than 100 full time employees or less than $10 million annual turnover. An extension of the new law in this (or a similar) way would be consistent with the government’s usual approach to protecting small businesses in the same manner as individual consumers, and in our view is highly likely.

Tightened restrictions on drip pricing and transaction based charges

The new law aims to improve price transparency for consumers and eliminate ’drip pricing’, where a business adds charges through the transaction process to obscure the total price payable by the consumer. It is likely to be particularly relevant to businesses in travel and tourism, hospitality and accommodation, ticketing and events, and online retail.

A person offering goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, who displays a base price for those goods or services, will be required to also display at the same time, in a legible, prominent, and unambiguous way, and close to the base price, prescribed information about any ’transaction based charge’.

A transaction based charge is a mandatory charge payable by the purchaser for the supply that is not an amount payable for the goods or services themselves, but which is payable at the same time as the amount payable for the goods or services. This would include various types of ’fees’ added to purchases, such as service fees, handling fees, and booking fees. The law expressly excludes from the definition of transaction based charge payment surcharges, taxes and fees imposed on or payable by the supplier, and charges payable at the consumer’s option.

The supplier must display the amount of the transaction based charge (where it can be calculated, or otherwise the method for its calculation), the fact that it is a per-transaction charge, whether the charge is or may be payable, and whether or not the base price displayed includes the transaction based charge.

The new requirements are additional to the Australian Consumer Law’s existing rules around single-pricing, which require businesses to display a single total price that includes all quantifiable amounts when the price is represented. However, the existing rules only apply to quantifiable charges, and to fees that are properly a ’component’ of the price and is a point-in-time obligation that is difficult to apply to a multi-stage purchase flow. The new law improves on those rules by now requiring disclosure upfront of mandatory transaction based charges that are applied during the purchase process. Whenever the base prices is displayed, the obligation to display the specific transaction based charge information will arise.

New rules for subscription contracts

Finally, the law introduces new rules around subscription contracts, intended to address the common ’subscription trap’ where consumers remain subscribed to receive goods or services for longer than intended or cannot easily cancel their subscription.

A subscription contract is one providing for:

• the recurring or continuing supply of goods or services for an indefinite period, where a person is automatically liable to pay for them, and that person has a right to end the contract
• the supply of goods or services for a fixed period, where the supply will continue after the fixed period unless a party terminates it, a person is automatically liable to pay for the supply, and that person has a right to end the contract
• the supply of goods or services for an initial period free of charge, where a person is automatically liable to pay for supplies made after that initial period, and that person has a right to end the contract before the liability is incurred, and
• the supply of goods or services for an initial period, where a person is liable to pay for the supply at an initial period at a particular rate, but will automatically incur liability to pay for supplies at a higher rate after the initial period, and that person has a right ot end the contract before becoming liable to pay the higher rate.

The law expressly excludes from the definition of subscription contract a lease, a licence of real property, hire-purchase contracts, instalment payment contracts, childcare contracts, and schooling contracts.

Where a person offers to supply goods or services under a subscription contract, they will be required to disclose that the contract is a subscription contract together with information about:

• liabilities to pay that a party (other than the supplier) would or may incur
• the period of the contract
• renewal, extension, or other continuation of the contract
• any notice that a party (other than the supplier) must give to end the contract, and how to end it, and
• any other prescribed matter.

That information must be disclosed in a comprehensible, audible, and unambiguous way within a reasonable time before a person could agree to enter into the contract, or in a legible, prominent, and unambiguous way in close proximity to where a person (other than the supplier) can agree to enter into the contract. Information in some circumstances, and for some kinds of goods and services, is likely to be subject to further prescription by regulation in due course.

Next, where certain prescribed subscription contracts are in effect and they are:

• for the supply of goods or services to an individual acquiring them wholly or predominantly for personal, domestic, or household use or consumption, or
• a standard form contract where the subscriber is a small business, meaning they employ fewer than 100 full time equivalent employees or have an annual turnover of less than $10 million,

then the supplier must give the subscriber, in a legible, prominent, and unambiguous way, certain prescribed information in relation to the subscription contract and certain prescribed times. The details of which contracts will be covered by this requirement, what exactly will be required by way of disclosure, and when are to be provided by regulations. We know from the exposure draft of the legislation that the regulations are likely to impose disclosure requirements around the fact and type of the subscription, the price and ongoing payment liabilities, the end of free trial or discount periods, how to end the contract without liability for charges (or higher charges), and how to cancel.  There are likely to be requirements to give consumers reminders at prescribed points that they are still subscribed, about what they are paying for the subscription, and about how to cancel.

Lastly, for individual and small business consumer subscription contracts, the supplier must provide a way for the subscriber to end the contract that is easy to find, straightforward, and requires the subscriber to take only steps that are reasonably necessary to end the contract and protect the subscriber’s interests. Where the contract is entered into online, the supplier must allow the contract to be ended by an online method.   

The new subscription contracts laws will apply to contracts entered into on or after 1 July 2027, and to contracts entered into before that date that are renewed, extended, ’otherwise continued’, or varied after 1 July 2027, with effect from the date they are renewed, extended, continued, or varied. The Explanatory Memorandum to the bill indicates that ’otherwise continued’ is intended to be read alongside the reference to ’renew’ and ’extend’ – for example, to cover a subscription agreement that is in force on 1 July 2027 for a fixed term, where the subscription will continue after the expiry of that fixed term, so that the new laws will apply from the point of its continuation past the fixed term.

The enforcement and penalties risk

Contraventions of the new laws will attract the usual Australian Consumer Law penalties: namely, civil penalties of up to $50 million, or three times the benefit obtained, or 30% of adjusted turnover for the breach period, whichever is higher, in the case of corporations; and civil penalties of up to $3.5 million, in the case of individuals. Other remedies, including injunctions and compensation orders, will also be available in the usual way.

What businesses should do to prepare

For most businesses, particularly those selling to consumers online, the new laws will require a careful review of existing systems and processes to ensure that they will be compliant before 1 July 2027. This, typically, will involve an analysis of existing consumer-facing transaction processes from advertising and acquisition through to cancellation, reviewed against the risks of manipulative/distortive conduct, the transaction based charge disclosure requirements, and the new subscription contract rules. Businesses operating on a subscription basis may need to update standard contract terms, and develop the infrastructure needed to deliver prescribed notices to consumers and to handle cancellations in a compliant way. Businesses should ensure that sufficient time is allowed to make system and process changes as necessary to address those risks well before the new laws take effect.