Australia: E-commerce under the microscope

Last Updated: 29 September 2018
Article by Murray Thornhill

How many times have you bought something online, whether a retail product, a news service, a game or app, and been required to click your agreement to the "fine print"? Have you ever actually read the fine print? Or have you ever accessed a site that says somewhere "continued use of this site constitutes agreement with the terms and conditions of use ...." Have you ever cared about what you are agreeing to?

The ways in which we buy goods and services online is coming under increasing scrutiny. While our consumer protections laws have never been tougher, it has never been easier to give away your legal rights without ever knowing about it. In late 2017, the Treasurer directed the ACCC to conduct a formal inquiry into digital platforms. While that inquiry focuses especially on the supply of news and media, the implications are significant for all e-commerce.

Murray Thornhill sat down with Dr Michael Schaper* from the ACCC .....

Murray Thornhill: To what extent are click-wrap agreements and e-commerce platforms being examined by the Australian Competition and Consumer Commission (ACCC)?

Dr Michael Schaper: ACCC will consider customer contracts with digital platforms as part of the ACCC's inquiry into Digital Platforms and this will include any so-called click-wrap agreements. Separately, it's important to note that click-wrap agreements are already covered by the provisions of the Australian Consumer Law; in particular, prohibitions against misleading and deceptive conduct and unfair contract terms.

The Terms of Reference for the Digital Platforms Inquiry require the ACCC to examine the impact of digital search engines, social media platforms and other digital content aggregators (platform services), on the state of competition in media and advertising services markets; in particular, in relation to the supply of news and journalistic content, and the implications of this for media content creators, advertisers and consumers.

Matters that the ACCC will consider as part of the inquiry, but is not limited to, include:

  • The extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers;
  • The impact of platform service providers on the level of choice and quality of news and journalistic content to consumers;
  • The impact of platform service providers on media and advertising markets;
  • The impact of longer-term trends, including innovation and technological change on competition in media and advertising markets; and
  • The impact of information asymmetry between platform service providers, advertisers and consumers, and the effect on competition in media and advertising markets.

While the inquiry is not focused on the use of click-wrap agreements, click-wrap agreements are a significant consumer concern, and can be a feature of digital platforms.

Are any industries or areas of trade of more interest and relevance with respect to the use and terms of click-wrap contracts to the ACCC than others?

The ACCC's priorities are set out in the Compliance and Enforcement Policy, which is released by the ACCC chairman in February each year. In addition to changing annual priorities, such as new car retailing and consumer issues related to broadband services, the ACCC has a list of enduring priorities around cartels, anti-competitive conduct, and issues that disproportionately impact vulnerable and disadvantaged consumers.

Click-wrap contracts don't fall specifically into any one of the categories identified, but that doesn't mean they won't be a focus. The Digital Platforms Inquiry is revealing a number of issues including consumer concerns with the nature of their engagement with the platforms which will be looked at closely.

In what ways might consumers have difficulty with click-wrap agreements?

Click-wrap agreements have the potential to contravene the Competition and Consumer Act 2010, the legislation enforced by the ACCC. In particular, these agreements may lead to misleading or deceptive conduct in connection with the supply of goods or services.

Equally, the use of a click-wrap agreement might also hide from consumers or businesses, contract terms that are unfair within the meaning of the unfair contract terms prohibition under Australian Consumer Law.

In some situations, it could be argued that the use of a click-wrap agreement might be unconscionable conduct within the meaning of the ACL.

Click-wrap agreements can be used in high pressure transactions, where a consumer is looking to complete a transaction for goods and services and before they can proceed with the transaction they must agree to the terms and conditions of that transaction. Many consumers use mobile devices for these transactions and it is extremely difficult to read, comprehend and understand the ramifications of these terms and conditions at the best of times, let alone on a mobile device in a pressured environment. But as they are judged on a case-by-case basis, there is no hard and fast rule to apply.

Can the mere design of a click-wrap contract on a website (never mind the actual fine print) be misleading or likely to mislead?

It may depend on the design. If the design is misleading or deceptive there is little wiggle room: misleading and deceptive conduct is prohibited under Australian Consumer Law. The courts have interpreted misleading and deceptive conduct as conduct or representations that create a false impression to a consumer. A business that omits certain information or designs a click-wrap agreement to hide specific and relevant information from consumers is also misleading.

In this case, consumers can expect that a business that uses standard form agreements as part of its business model will prominently advise consumers of pertinent information that may cause harm or detriment to the consumer.

One of the features of click-wrap contracting and other forms of e-contracting, is the contrast between the complexity and level of detail in the contract, and the way the platform facilitates ease of entry into the bargain and lack of awareness of the terms. The vast majority of consumers (for example) will never read the fine print. To what extent does this create problems of interest to the ACCC?

This highlights a serious issue that goes to the heart of the current debate around privacy on online platforms. It's an issue that is becoming increasingly prominent and is well and truly on the ACCC's radar.

More generally, if businesses choose to rely on harsh and oppressive terms and conditions in standard form contracts, this may cause significant harm for consumers. In some instances, consumers may be able to use the prohibition against unfair contract terms to have unfair or unreasonable terms and conditions in these contracts set aside.

In these cases, the offending clauses in the contract no longer apply but the remainder of the contract (that is, the 'not unfair' part) remains valid.

But consumers should not rely on the courts striking down a section of a contract. This is where social media users can use the shared knowledge of the platform to protect themselves. There are many examples of companies that have had to rewrite their click-wrap agreements either because the groundswell of objections to how onerous they were or, as further evidence even companies don't know what's in them, they copied and pasted them from another source and they aren't applicable in the new circumstances.

The ACCC and other regulators often advise consumers and businesses to be aware of, and understand any terms and conditions that apply to provision of goods and services.

Is it an area where greater regulation is being considered or may be considered?

The ACCC's role is primarily to administer and enforce the Competition and Consumer Act. Questions of policy or increased regulation are for the government or relevant policy authorities. In the course of administering the CCA, the ACCC advises and makes recommendations to Government on the need for regulation, and inquiries such as the Digital Platforms Inquiry will lead to ACCC recommendations which may then be taken up by government.

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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Murray Thornhill
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