The national competition regulator, the ACCC, has begun to flex
its muscles and for the first time has exercised its new power to
"name and shame" businesses which it suspects have misled
the public and pose a real threat to unsuspecting consumers.
In this case, three companies placed advertisements in different
newspapers offering a business for sale. The advertisements all
related to a parcel delivery business which involved the delivery
of "Heartlink" branded products to supermarkets. The
companies claimed in the advertisements that potential business
owners could earn between $900 and $1,200 per week for part-time
work, in return for an initial investment of between $10,000 and
$30,000. In practice, none of the purchasers achieved the claimed
earnings and in fact, most of the purchasers received no
In response, the ACCC issued a "public warning notice"
last Friday in respect of all three companies, warning the public
that the advertisements are misleading and cautioning against any
purchasers investing in the advertised businesses. The ACCC was
satisfied that the three relevant criteria for issuing a public
warning notice had been met, namely: (1) there were reasonable
grounds to suspect that the conduct of the three companies was in
breach of the Trade Practices Act; (2) it was satisfied that at
least one person has or would suffer detriment as a result; and (3)
it was satisfied that the issuing of the notice was in the public
The ACCC's power to issue a public warning notice was
introduced as part of the first phase of the new Australian
Consumer Law reforms which took effect in April 2010 and provided
the ACCC with greater enforcement powers to ensure compliance by
businesses with consumer legislation.
The ACCC has also been granted the power to issue
infringement notices", where the ACCC fines a person or
company who has allegedly " breached certain provisions of the
Trade Practices Act including by engaging in " unconscionable
conduct or pyramid selling; and
substantiation notices", which require businesses to
provide evidence to support " promotional claims regarding
their goods or services
This is the first case to be placed on the ACCC's public
register for warning notices. There is also a public register for
infringement notices but the ACCC has yet to exercise its power to
issue such a notice. The ACCC did not issue a substantiation notice
prior to issuing the public warning notice in this case.
As mentioned, these changes form part of the Australian Consumer
Law reforms, which are intended to establish a uniform national
consumer protection system. Those reforms are summarised in our
earlier alerts available
The second wave of reforms will take effect on 1 January 2011,
including new statutory consumer guarantees to replace the existing
implied conditions and warranties regime. We will keep you advised
on the effect of the changes. If you have questions about the
impact of the Australian Consumer Law on your business, please
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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