Competition & Consumer Act 2010 & the Australian Consumer Law

1. Competition & Consumer Act 2010 & the Australian Consumer Law BEC Workshop XX August 2013 Presented by Michael JerabekEducation & Engagement Manager (NSW & ACT)

2. What will I cover today? • Consumer guarantees & voluntary (express) warranties • Misleading & deceptive conduct/false & misleading representations • Unfair contract terms law • Unconscionable conduct • Product Safety • Scams • Restrictive trade practices • Enforcement of ACL

3. Selling and advertising… • ‘If you say something dishonest outright, you’re breaking the law, but simply keeping quiet about something is ok.’ • ‘A business owner can be liable for comments made on their business’ social media by 3rd parties if those comments are misleading.’ • ‘A statement may be true in fact yet be considered misleading in law.’ True or False?

4. Faulty goods and/or returns… • A customer tries to return a good purchased from you that is faulty due to a manufacturing defect but you refer her to the manufacturer instead as that is where the source of the problem lies Signs in store or online: • ‘Be warned - No refunds given under any circumstances’ • ‘No refunds given for change of mind’ • ‘Refund given on demand for goods in original condition’ What are the implications, if any, of the above?

5. Small business self assessment checklist • You have 15 minutes to complete the checklist • Write down any questions that may come up for you • Feel free to discuss with your neighbour/s when finished

6. Australian Competition & Consumer Commission National law enforcement agency responsible for administering the Competition and Consumer Act 2010, which aims to: • promote competition and fair trading; and • protect consumers NSW Fair Trading/Consumer Trader Tenancy Tribunal

7. Consumer guarantees Consumer guarantees apply to: • goods or services of any type up to $40,000 in value (and...) • goods purchased online, over the phone or in person • new & second hand goods • leased, hired & purchased goods Consumer guarantees do NOT apply to: • auctions (if selling on behalf of another) • one-off sales (e.g. private sales such as car or garage sale) • buying to on-sell (e.g. car repairer purchasing parts to be used in repairs) • If consumers simply change their minds • If consumers misuse the goods • If consumer has not specified what the goods are to be used for and this is not obvious from the circumstances

8. Acceptable quality: fit for purpose, acceptable appearance & finish, free from defects, safe & durable (exception) Reasonably fit for any purpose specified by customer or supplier Suppliers and manufacturers guarantee that their description is accurate Suppliers guarantee goods match sample, demonstration model and description Voluntary (express) warranties to be satisfied Suppliers guarantee clear title unless customer informed otherwise Suppliers guarantees undisturbed possession for the customer (some exceptions) Goods to be free ofhidden securities or charges (some exceptions) Reasonable availability of spare parts & repair facilities for reasonable length of timeguaranteed by manufacturer or importer (exception) Nine consumer guarantees applying to goods: • If any of these guarantees are not met, the consumer • has a right to a remedy.

9. Three consumer guarantees applying to services A supplier must meet the consumer guarantees of providing services: • with due care and skill • which are fit for any specified purpose • within a reasonable time (when no time is set) • If any of these guarantees are not met, the consumer • has a right to a remedy.

10. Consumer guarantees – important concepts • Majorfailure • Minorfailure • Consequential loss • Rejection period • Trader’s v manufacturer’s/importer’s responsibility • Consumer guarantees v voluntary warranties

11. Misleading & Deceptive Conduct It is unlawful for a business to make statements in trade or commerce that: • are misleading or deceptive, or • are likely to mislead or deceive • Failing to disclose relevant information, promises, opinions and predictions can be misleading/deceptive • Advertisements, promotions, quotations, statements and any representations made by a person are included • ‘Small print’ and disclaimers no excuse • Overall impression considered

12. Some examples… • Silence can be misleading… (Hardy v Your Tabs Pty. Ltd.) • Disclaimers and small print can be misleading… (ACCC v Target Australia Pty Ltd [2011] FCA 13260) • Predictions & opinions can be misleading if unreasonable… (Journal reference: (2009) 17 TPLJ 25)

13. False & Misleading Representations • It is unlawful for a business to make false or misleading representations about goods or services when supplying, offering to supply or promoting them • An offence punishable by a fine of up to $220,000 for an individual and $1.1 million for a body corporate • Representations can be made: • Verbally or in writing • In person, online, over the phone or through correspondence • In packaging/promotional material • Through words, pictures or symbols or combination thereof

14. A business must not make false or misleading representations about: • standard, quality, value or grade of goods & services • place of origin of a product • buyer’s need for the goods or services and whether the goods are new (also their history & use) • sponsorship, approval, performance, benefits and uses of goods and services • price of goods and services • any guarantee, warranty or condition Also: • Whether a representation is misleading may depend on the characteristics of a specific group • A representation can be misleading even if it s true or partly true

15. Unconscionable conduct • Under the ACL unconscionable conduct covers business to business transactions as well as business to consumer transactions • UC can be described as behaviour which is irreconcilable with what is right or reasonable and is seen as harsh and/or oppressive • Usually involves a stronger party exploiting its bargaining advantage to impose terms or conditions that are unreasonable or against good conscience towards a smaller or weaker party

16. Some examples of possible unconscionable conduct • Failing to disclose important contractual terms • Not allowing sufficient time for consumer to read agreement, seek advice, ask questions & decide • Refusing to deal with legitimate complaints • Not explaining terms of contract to consumers from NESB • Using friends/relatives to influence decision-making • Refusing to accept ‘No’ for an answer

17. Unfair contract terms • ACL enables a court to find a contract term unfair & declare it to be VOID (treated as if it never existed) • Applies to standard form contracts including written and oral – over the phone or face to face. • Applies to contracts entered into on or after 1 July 2010, and terms of contracts altered on or after 1 July 2010 • Contract remains binding to the extent that it can operate without the unfair term

18. Unfair contract term test • Does the term create a significant imbalance between rights and obligations of the two parties? • Is the term reasonably necessary to protect legitimate interests of the business? • Would the term cause a detriment (financial or non-financial) if the business tried to enforce it? • How transparent is the term?

19. Product Safety • Imposing mandatory safety standards • Product testing • Issuing public safety warning notices • Issuing compulsory recall notices • Banning unsafe products • Mandatory reporting www.productsafety.gov.au www.recalls.gov.au

20. Scamwatch website • how scams work, • latest scams, • report scams, • register for email alerts, • scambuster app, • educational videos etc. www.scamwatch.gov.au • The issue of grant re-sellers…

21. Restrictive Trade Practices • Cartel conduct (s.44) • Anti-competitive agreements (s.45) • Misuse of market power (s.46) • Exclusive dealing (s.47) • Resale price maintenance (s.48) • Prohibition of acquisitions (s.50)

22. Compliance & enforcement outcomes • Education, advice & persuasion • Voluntary industry self-regulation • Administrative resolution • Infringement notices (up to $220,000 for individuals and $1.1 million for corporations) • Section 87B enforceable undertakings • Court proceedings (declarations, injunctions, public notices, findings of fact, financial redress for injured parties, non-punitive orders, significant pecuniary penalties, convictions, prison sentences)

23. New ACCC resource available Free online education program for small businesses on Australia’s competition and consumer laws www.ccaeducationprograms.org

24. Purpose & content of program • Access this free online education program, funded by the ACCC, to learn more about your rights & obligations under the Competition and Consumer Act 2010 • There are 10 modules, covering the following topics:

25. Further information • Visit the ACCC website www.accc.gov.au • Call the ACCC Infocentre – 1300 302 502 • Visit the ACL website www.consumerlaw.gov.au • Subscribe to the ACCC Small Business Information Network for regular fair trading email updates

26. Open forum Any questions arising from the checklist or the presentation?