Australia: The ACCC has released its consumer protection priorities for 2014: forewarned is forearmed

Key Points:

The ACCC will scrutinise falsely described discounts, misleading consumers on comparator websites, incremental costs online or deceptive claims that a business is niche and smaller than it really is.

Periodically, the ACCC focuses on new areas of consumer detriment and corporate behaviour. However, it considers some forms of conduct to be so detrimental to consumers that they remain an ongoing priority. Given that the ACCC traditionally concentrates its attention and resources on its priority areas, businesses should take a moment to consider whether they could be a target in 2014.

Telecommunications and energy sectors

In the energy sector, the ACCC will transition from focusing on unlawful door-to-door sales to reviewing retailers' promotion of discounted energy plans. It's foreshadowed imminent court action against retailers who use words like "discounted" or "savings off" if their final price is not actually discounted at all.

The ACCC will also continue to scrutinise the telecommunications industry's advertising and sales practices and will be encouraged by the High Court's recent decision to reinstate a $2 million penalty against a company which had not adequately disclosed the full cost to consumers of its bundle offers.

Emerging consumer issues in the online marketplace

In 2014, the ACCC will turn its focus to comparator websites and drip pricing. Comparator websites inform consumers of the prices of similar or identical goods offered for sale by different suppliers so that they can be purchased at the cheapest price. The ACCC is concerned that the information displayed on many of these comparator websites misleads consumers because accurate comparisons are not provided.

Drip pricing involves the incremental disclosure of fees when making an online booking, rather than disclosing all fees before you make the booking. The ACCC believes that this practice lacks transparency, may mislead consumers and makes it difficult for legitimate competitors to contend for business.

Credence claims

In 2014, the ACCC will target large manufacturers that inaccurately market themselves as small niche businesses. The ACCC's concern is that this may mislead consumers who prefer to support Australia's small businesses and may result in consumer scepticism, which may further suffocate innovation and reduce market competition.

Ongoing priorities

  • The ACCC will always prioritise the assessment of product safety issues which have the potential to cause serious harm to consumers. Its current focus is on low cost imported goods sold in Australia's major stores so always consider the safety and compliance (especially with Australian standards) of these products.
  • Consumer guarantees remain a key focus for the ACCC. This year, the spotlight will be shone on extended warranties to ensure that consumers are not misled into purchasing remedies to which they are already entitled pursuant to law.
  • Identifying and publicising scams, and contacting consumers before they become victims, will be prioritised and, given the attention of its upcoming abolition, businesses should ensure that they do not attribute price increases to the carbon tax.
  • The ACCC has moved from a compliance phase to an enforcement phase in relation to the unfair contract terms regime. Given that an August 2013 decision of the Federal Court held that a number of clauses in a standard form consumer contract were unfair and detrimental to customers, the ACCC is likely to take further enforcement action in this area.
  • Finally, the ACCC will continue to identify and address consumer protection issues impacting on indigenous communities.

What action should business take?

In light of the ACCC's 2014 priorities, businesses should remind themselves of their obligations and review their product/service documentation and business practices.

  • If you operate in the telecommunications or energy sectors, review your sales and advertising practices to ensure that they comply with your obligations. This is particularly relevant if you are offering discounts, but fail to disclose how the product / service is discounted.
  • If you operate a comparator website, you need to ensure that you are providing accurate and objective comparative information that will not mislead consumers.
  • If you promote products or services online as being cheap, but then charge fees incrementally throughout the billing process, you need to ensure that you are not misleading your customers. Attracting consumers' attention with cheap products may appear to be a good marketing tool. However, if the final price is much higher, your conduct may be assessed as being misleading and deceptive.
  • Large manufacturers should refrain from claiming to be niche small businesses. Preying on consumers who prefer to purchase goods from Australian small businesses may result in the ACCC lodging enforcement action against you.
  • If you import cheap goods to sell in Australian stores, make sure they accord with our strict safety regulations and Standards. Failure to do so could result in the ACCC ordering a product recall.
  • Standard form contracts remain under scrutiny. Review your terms, and ensure they accord with your legal obligations.
  • Ensure your product/service documentation complies with the consumer guarantee requirements regarding rights to refunds, repairs and replacements and that your sales staff are adequately trained about your business' obligations.
  • When it is repealed on 1 July 2014, ensure that your prices do not continue to reflect the carbon tax.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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