Consumer Affairs Australia and New Zealand (CAANZ) has delivered its
final report on the Australian Consumer Law (ACL) review to the Commonwealth and state/territory consumer affairs Ministers.
The report is independent of the Productivity Commission 'enforcement' report noted
here recently.
CAANZ proposes
a package of 19 legislative reforms to strengthen and clarify the ACL, in order to improve consumer wellbeing.
The proposals include-
- aligning the penalty regime under the competition provisions of the Competition and Consumer Act 2010 by increasing the financial penalties for ACL breaches for:
individuals from $220,000 to $500,000, and
companies from $1.1 million to the greater of:
the maximum penalty of $10 million, or
three times the value of the benefit received, or
10 per cent of the annual turnover in the preceding 12 months;
- making it easier for consumers to get a refund for a faulty product;
- adding new requirements for extended warranties, including a 10-working-day cooling-off period;
- ;introducing a general safety law so that traders are required to ensure their products are safe before they enter the market;
- making online shopping fairer by ensuring any charges associated with pre-selected options are included in the headline price;
- extending the protections against unfair contract terms to insurance contracts;
- making it clear that the protections available in the ACL for unsolicited sales can apply to public places.
The specific reform package is ...
Looking to the future
Australian Consumer Survey -- Commission a third Australian Consumer Survey in 2021 to assist with monitoring and review of the ACL.
Consumer guarantees
Proposal 1:
Rights to refunds and replacements -- Specify that where a good fails to meet the consumer guarantees within a short specified period of time, a consumer is entitled to the remedies of a refund or replacement without needing to prove a ‘major failure’.
Proposal 2:
Multiple non-major failures -- Clarify that multiple non-major failures can amount to a major failure.
Proposal 3:
Extended warranties -- Enhance disclosure in relation to extended warranties by requiring:
• agreements for extended warranties to be clear and in writing
• additional information about what the ACL offers in comparison
• a cooling-off period of ten working days (or an unlimited time if the supplier has not met their disclosure obligations) that must be disclosed orally and in writing.
Proposal 4:
Warranty against defects -- Clarify the mandatory text requirements for warranties against defects by developing text specific to services and services bundled with goods.
Proposal 5:
Goods damaged or lost in transit -- Clarify the scope of the exemption from the consumer guarantees for the transport or storage of goods where those goods are damaged or lost in transit.
Guidance on ‘unsafe’ and ‘reasonable durability’
Work with stakeholders (including tribunals) to provide more specific guidance on both ‘unsafe’ goods and ‘reasonable durability’.
Fit-for-purpose consumer guarantees
Examine whether the current consumer guarantees are fit-for-purpose for purely digital products, certain market practices and emerging technologies.
Product safety
Proposal 6:
General safety provision -- Introduce a general safety provision that would require traders to ensure the safety of a product before it enters the market including:
• a flexible and less prescriptive approach to compliance by reference to product safety standards (for example, a ‘safe harbour’ defence to a breach of the general safety provision)
• a penalty regime for breaches of the general safety provision, consistent with the ACL penalties regime.
Proposal 7:
Voluntary recalls -- Clarify and strengthen voluntary recall requirements by:
• introducing a statutory definition of ‘voluntary recall’
• increasing penalties for failure or refusal to notify a voluntary recall, proportionate to other ACL penalties.
Proposal 8:
Powers to obtain information -- Strengthen ACCC powers to obtain information about product safety, by broadening the power to apply to any person (including a consumer) likely to have relevant information, rather than only the supplier.
Mandatory reporting
Make clearer traders’ mandatory reporting obligations by clarifying through regulator guidance:
• existing reporting requirements (including timeframes)
• reporting triggers on the meaning of ‘serious injury or illness’ and ‘use or foreseeable misuse’.
Product bans and recalls
Explore options to streamline processes for implementing product bans and compulsory recalls, taking into account findings of the Productivity Commission’s study of Consumer Law Enforcement and Administration.
Product safety data
Promote enhanced collection and dissemination of product safety data, taking into account findings of the Productivity Commission’s study of Consumer Law Enforcement and Administration and initiatives undertaken by other regulatory regimes.
Unconscionable conduct
Proposal 9:
Publicly-listed companies -- Extend the ACL (and ASIC Act) unconscionable conduct protections to
publicly-listed companies.
Unfair trading
Explore how an unfair trading prohibition could be adopted within the Australian context to address potentially unfair business practices.
Unfair contract terms
Proposal 10:
Insurance contracts Apply unfair contract terms protections to contracts regulated by the Insurance Contracts Act 1984 (Cth).
Proposal 11:
Powers to obtain information Enable regulators to use existing investigative powers to better assess whether or not a term may be unfair.
Unsolicited consumer agreements
Proposal 12:
Threshold requirements for unsolicited consumer agreements Ensure that the unsolicited selling provisions operate as intended by clarifying that the provisions:
• can apply to public places
• capture suppliers in their negotiations with consumers where the suppliers obtain from a third party (sometimes referred to as a ‘lead generator’) a consumer’s contact details or permission to be contacted.
Unsolicited selling
Undertake an economy-wide study to examine the role, nature and impact of unsolicited selling in the Australian economy, to inform future policy development.
Purchasing online
Proposal 13:
Pre-selected options Enhance price transparency in online shopping by requiring that any additional fees or charges associated with pre selected options are included in the headline price.
Proposal 14:
Online auctions Modernise the ‘sale by auction’ exemption from the consumer guarantees by ensuring the consumer guarantees apply to all online auctions.
Scope of the ACL
Proposal 15:
Definition of ‘consumer’ Increase the $40,000 threshold in the definition of ‘consumer’ to $100,000.
Proposal 16:
Financial products -- Amend the ASIC Act to clarify that all ACL-related consumer protections that already apply to financial services also apply to financial products.
Charities, not-for-profit organisations and fundraisers -- Clarify through regulator guidance the current application of the ACL to the activities of charities, not-for-profit entities and fundraisers.
Charities, not-for-profit organisations and fundraisers -- Assess the effectiveness of the proposed guidance on not-for-profit fundraising, further regulator actions, and whether any amendment to the ACL is necessary.
Review of exemptions under the ACL -- Review current exemptions, with a view to removing those that are no longer in the public interest.
Other amendments
Amendment (a) -- Amend the definition of ‘unsolicited services’ in section 2 of the ACL to allow the false billing provisions (sections 40 and 162) to apply to false bills for services not provided.
Amendment (b) -- Amend section 12DC of the ASIC Act to address terminology inconsistent with other consumer protection provisions in the ASIC Act and that may unintentionally narrow the scope of the provision.
Amendment (c) -- Amend section 76 of the ACL (or the regulations) to clarify that disclosure requirements for unsolicited consumer agreements do not apply to certain exempt agreements.
The ACL in practice
Proposal 17:
Private action -- Ease evidentiary requirements for private litigants through an expanded ‘follow on’ provision enabling them to rely on admitted facts from earlier proceedings.
Penalties and remedies
Proposal 18:
Maximum financial penalties -- Increase maximum financial penalties available under the ACL by aligning them with the penalty regime under the competition provisions of the Competition and Consumer Act 2010:
• for companies, the greater of:
- the maximum penalty (of $10 million), or
- three times the value of the benefit the company received from the act or omission, or
- if the benefit cannot be determined, 10 per cent of annual turnover in the preceding 12 months.
• for individuals, $500,000.
Proposal 19:
Community service orders -- Allow third parties to give effect to a community service order where the trader in breach is not qualified or trusted to do so.
