ACCC announces 2019 enforcement priorities

influence legal canberraEarlier this week, the ACCC announced its enforcement priorities for 2019.

As well as the enduring priorities of:

  • cartel conduct;
  • anti-competitive conduct;
  • product safety;
  • conduct affected vulnerable and disadvantaged consumers; and
  • conduct affecting Indigenous consumers,

this year’s focus areas include:

  • consumer guarantees on high value electrical products and whitegoods;
  • anti-competitive conduct and competition issues in the
    financial services sector, including foreign exchange services where fees “seem to remain stubbornly high“;
  • opaque pricing of essential services, including telecoms and energy;
  • protection for small business, including under franchising and unfair contract requirements; and
  • customer loyalty schemes.

A new focus is on emerging issues in advertising and subscriptions on social medial platforms, especially for younger consumers.

In announcing the 2o19 priorities, Chair Rod Sims stated that the ACCC expects 3 significant cartel investigations to be referred to the Commonwealth DPP. The ACCC will also be occupied with the Consumer Data Right, where pilots and generic data sharing are expected to be in place in July, with consumer data to be shared by February next year.

Highlights of 2018 and areas to watch in 2019

2018 came and went in a flash. France celebrated glory in the FIFA World Cup in Russia; Banksy sold his ‘Girl With Balloon’ painting for $1.86 million before the artwork shredded itself seconds after the gavel dropped; and the online world was captivated by the World Record Egg. And as we say goodbye to summer and settle into the working year, why not take the chance to reminisce on some of the more important developments of 2018, and look forward to those that 2019 has in store?

Influence Legal developmentsLooking back on 2018

  • New obligations were enforced under the European Union General Data Protection Regulation (the GDPR). While the GDPR is an EU regulation, the obligations have a wide reach, applying to all Australian businesses who have an establishment in the EU, offer goods & services to the EU, or monitor the behaviour of individuals in the EU.
  • As part of the government’s safe harbour and insolvency reforms, we saw the introduction of the ipso facto insolvency reforms by way of the Treasury Laws Amendment (2017 Enterprise Incentives No.2) Act 2017. The reforms apply to contracts entered into on or after 1 July 2018, affecting the ability of contracting parties to exercise termination, enforcement or other rights that are triggered by a company restructuring or insolvency.
  • The European Parliament voted in favour of introducing the controversial EU Copyright Directive, a legislation designed to better meet the needs of copyright protection in the internet age. The proposed directive caused significant global debate around the detrimental effects of Articles 11 (the Link Tax) and 13 (the Meme Ban), headlined as the ‘death of the Internet’.
  • The ACCC highlighted its hard stance against franchises attempting to contract out of their obligations under the Franchising Code of Conduct and the Competition and Consumer Act. The ACCC’s case against Husqvarna Australia highlighted the importance of all companies that appoint dealers, distributors, licensees or similar, to confirm whether their contracts are in fact franchise agreements.
  • A Victorian Supreme Court cast some doubt over the enforceability of contractual provisions that attempt to limit the period in which parties can claim for misleading or deceptive conduct. This arose in the case of Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246, where the court considered the enforceability of a contractual provision requiring claims (including for misleading or deceptive conduct) to be made within 7 days.Justice Riordan, deciding in contradiction to a number of NSW decisions, ruled in favour of the “no exclusion principle”, stating that allowing the enforceability of such time limitations on claims would be against the public policy underpinning the provisions of the Australian Consumer Law (ACL).

Some areas to watch in 2019

  • Discussions over the EU Copyright Directive continue, with negotiators for the European Parliament aiming to finalise the directive shortly. However, negotiations have broken down, with the three-way discussion between Council, Parliament and member states  derailed over the exact wording over Article 11 and Article 13. Consequently, the “trialogue” discussion that was set to take place on  23 January was cancelled. With upcoming EU elections in May, there likelihood of any closure on this matter in the near future is low, with a final vote likely to take place under the next parliament.
  • The Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018, commonly referred to as the AA Bill, was passed in December of last year. The Bill’s aim is to compel various companies, especially those in communications industries, to assist Australian security and law enforcement agencies by allowing access to encrypted communications they believe may contain plans for illegal or terrorist activity. The implications of the Bill will be an interesting area to watch throughout the year, with a number of people, especially those within the tech and start-up communities expressing their concerns.
  • On 10 December 2018, the ACCC released its Digital Platforms Inquiry Preliminary Report. The ACCC’s report is founded on questioning the role and accountability of the global digital platforms (such as Facebook and Google) in the supply of advertising, news and journalism in Australia. The final report addressing these issues will be due on 3 June of this year.
  • There has been some debate globally and in Australia regarding the “hipster antitrust” laws, questioning the standards of competition law. The current foundation of competition law in Australia is focused on consumer welfare. However, concerns have been raised that this standard is too narrow and does not allow for prosecution of some types of conduct that some commentators believe competition law should cover.While this debate is likely to continue throughout the year, ACCC Chairman Rod Sims has reinforced Australia’s consumer welfare position, expressing their opposition to the introduction of broader interest considerations of public policy into competition law enforcement.

Author: Blake Motbey, Paralegal.

Know your customers’ rights

In a previous post we looked at the issue of written terms and conditions so dense that it was practically impossible for consumers to understand them.

This issue was highlighted last month when Purple WiFi revealed that it had hidden community service requirements for free WiFi users inside its clickwrap terms.  Only one person claimed the prize that was also concealed in the terms, while 22,000 agreed to clean toilets, hug stray animals and paint snail shells “to brighten up their existence”.

Lululemon website screenshot
Screenshot – Lululemon website

What about when terms and conditions don’t actually match your customers’ rights at law?

The recent Lululemon issue provides a great example. Lululemon has agreed to pay $32,400 in penalties after the ACCC issued infringement notices relating to misleading representations about consumer rights.

The Australian Consumer Law provides guarantees for faulty consumer goods and services.

Lululemon listed sale items on its website under the heading “We Made Too Much” with the statement “We made a little extra – don’t be shy, help yourself. It’s yours for keeps so no returns and no exchanges”.

Lululemon’s return policy also said “Final sale items like underwear, water bottles + We Made Too Much gear are yours for keeps”.

In addition, staff were alleged to have stated that there was no refund right for faulty products.

The ACCC alleged that these statements were representations that customers were not entitled to a refund or replacement for faulty goods, which is not the case under the Australian Consumer Law.  The consumer guarantee rights provide for refunds in the case of a major failure of goods or services.  This applies equally to full price and sale price products.

Importantly, these guarantees cannot be excluded in consumer transactions, and it’s a contravention of consumer law to attempt to exclude them in your terms and conditions.  However, they can be limited.  Check your terms and conditions to see if they include an up to date statement of your customers’ rights under the Australian Consumer Law as well as any permissible limitations.

If you would like us to review your terms and conditions, contact us.

 

“Terms and conditions apply”

influence legal conditions apply choice
Photo: CHOICE

CHOICE has made a compelling case for readability of contract terms and conditions, having hired Sydney actor Laurence Rosier Staines to read the 73,198 words of the Amazon Kindle terms and conditions – aloud.

Laurence starts out with enthusiastic professionalism …

Eight hours and 59 minutes later, he’s lost the will to live.

CHOICE head of media, Tom Godfrey, said, “Right now, the law protects us from unfair legal terms. But we think the practice of expecting a customer to spend hours of their lives reading a contract for a simple product is unfair. Companies need to do better and they should be explaining any conditions in a way that’s simple and easy to read.”

It’s not just a question of overly lengthy terms being unattractive for consumers to read. Unreadably long terms and conditions:

  • are often based on an approach of throwing in everything the drafter can think of, without working through what’s applicable for your individual business and tailoring accordingly.
  • can be less effective than clear, readable terms – for example, if disclaimers are not reasonably prominent, courts may decide that your terms are misleading or deceptive.
  • can be inconsistent with the Australian Consumer Law if they purport to limit consumers’ rights in a way that is not permitted, for example if you exclude refund rights for faulty goods.
  • can actually create more potential for complaints and disputes, if consumers have found them so difficult to read, they don’t end up understanding your product or service offering – wasting your time and money to resolve.

If you would like a review of your terms and conditions to check whether they work for your business and Australian law, contact us.

Private vocational training provider admits consumer law contraventions

Careers Australia Group Limited has provided enforceable undertakings to the ACCC after admitting false or misleading conduct and unconscionable conduct in contravention of the Australian Consumer Law.

The ACCC confirmed this week that Careers Australia will repay Commonwealth funds, cancel enrolments and invite students to have their VET FEE-HELP debts cancelled.

Careers Australia admitted to conduct including:

  • misrepresenting that courses were free;
  • misrepresenting that courses would increase students’ employment prospects; and
  • offering iPads and laptops with claims that they were free if the student signed up to the course.

This conduct included signing up 80 students from the same remote Indigenous community, who were offered inducements and not informed of the debts they would incur.

The admissions highlight troubling issues in the private vocational training sector, with the ACCC and other Commonwealth and State agencies reviewing the activities of several other providers.