In June 2015, Consumer Affairs Ministers asked Consumer Affairs Australia and New Zealand (CAANZ) to conduct a review of the Australian Consumer Law (ACL). In March 2017, CAANZ released its ACL Review Final Report. It made numerous recommendations on amending the ACL.
The Federal Government subsequently released draft legislation which proposes to implement 14 recommendations made by CAANZ.
We look at some of the proposed changes, and how they could potentially impact on your business.
Currently, the single price for the supply of a good or service does not need to include a charge that is optional. However, the proposed amendments will change this position, by requiring the single price for goods or services to include optional fees or charges associated with pre-selection, unless the consumer has selected that the charge not be applied.
This will likely impact airlines in particular, and the way they are able to advertise their prices. But it will also impact on any other businesses which have pre-selected options which are not included in their advertised price.
The proposed changes to the ACL clarify the definition of unsolicited consumer agreements by specifying that they may take place in a public place, and do not have to occur at a place where the dealer cannot enter without the consumer’s consent or invitation.
This clarifies that the provisions on unsolicited consumer agreements will apply where a dealer meets a consumer away from the supplier’s business or trade premises. Dealers who operate in such public places will need to comply with the unsolicited consumer agreement provisions.
The proposed amendments expand the information gathering powers of the ACCC and ASIC. Currently unable to investigate possible unfair contract terms, the proposed amendments give both the ACCC and ASIC this power in relation to consumer and small business contracts. This means that the ACCC will be able to use its investigative powers to consider whether it should seek a declaration that unfair contract terms are void.
The proposed amendments will clarify the exemption to the consumer guarantees for service contracts which relate to the transportation or storage of goods. Courts had previously interpreted the exemption as applying to the situation where either the buyer or seller was acting for business purposes. The proposed amendments narrow this position by stating that this exemption only applies where both the consignor and consignee are a business.
This means that the exemption will not apply where the consignee is a consumer. Transporters will need to ensure that they meet the consumer guarantees when delivering goods.
The proposed amendments clarify the definition of ‘financial products’ in the ASIC Act to include ‘financial services’.
Public companies are currently listed as an exception to various unfair conduct provisions in both the ACL and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), meaning that they are not currently protected by these provisions. However, the proposed amendments remove this exception.
Publicly listed companies will have increased protections under the ACL and ASIC Act, and will be able to challenge the unfair conduct of others on the basis that it is unconscionable.
A business which voluntarily recalls a consumer good due to a safety concern must currently make certain notifications. However, the concept of a ‘recall’ is not defined in the ACL. The proposed amendments incorporate a definition of ‘recall’ and will clarify when the notification obligations under a voluntary recall are invigorated.
Under the new definition, a voluntary recall is corrective action taken by a business to mitigate a consumer safety risk. Conduct such as merely correcting a minor safety flaw in a product will now trigger the notification obligations. The penalties for failing to notify of such a recall will also increase to $33,000.00 for individuals and the greater of $165,000.00 or three times the benefit obtained for companies.
The ACCC is currently only able to require a supplier to provide information about unsafe products. The proposed amendments broaden this power, allowing the ACCC to compel a third party to produce such information if they are capable of doing so. This third party is broadly defined as any ‘person’ – so could include other traders, test laboratories, safety consultants, consumers or other persons who have been injured by the unsafe product.
Currently, admitted or agreed facts by a person in certain proceedings under the ACL cannot be relied upon in subsequent proceedings. However, the proposed amendments will allow private litigants to rely on admitted facts in earlier proceedings.
This means that businesses will need to be cautious about which facts they admit or agree upon in any legal proceedings, including those brought by the ACCC, and should give thought to whether these facts could potentially be used against them in future proceedings. This also potentially increases the risk of class actions following ACCC proceedings.
Penalties and remedies
Under the ACL, a Court cannot direct a business to engage a third party to perform a required community service where that business has contravened the ACL. The proposed amendments will expand the Court’s power to require the business in contravention of the ACL to engage a third party to perform the required community service.
Whilst submissions on these draft reforms have now closed, businesses should consider being proactive in thinking through the potential impact of these proposed changes. It may be beneficial to use the draft legislation as best practice guidelines in anticipation of these proposed amendments being incorporated into the ACL and ASIC Act.
