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Further Challenges for Australian Consumer Law

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Consumer Law and Socioeconomic Development

Abstract

The Australian Consumer Law (ACL) was reviewed in 2016 following an Issues paper produced by Commonwealth Treasury in March 2016. It adopted a behavioural economics approach rather than a pure efficient market standpoint. There will be another national Consumer Survey as a follow up to the 2011 Survey.

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Notes

  1. 1.

    Since this paper was written the ACL Review process has continued. It can be consulted at consumerlaw.gov.au/review-of-the-australian...law/about-the-review/. See Productivity Commission, Review of Australia’s Consumer Policy Framework Final Report 2008 (Australia).

  2. 2.

    Ibid at vol 2, 27.

  3. 3.

    Ibid at vol 1, 23.

  4. 4.

    The Intergovernmental Agreement was signed in July 2009, http://consumerlaw.gov.au/review-of-the-australian-consumer-law/, last seen on 14/1/2016.

  5. 5.

    See http://consumerlaw.gov.au/review-of-the-australian-consumer-law/terms-of-reference/, last seen on 14/1/2016.

  6. 6.

    Commonwealth of Australia (2011).

  7. 7.

    Ibid, at 14.

  8. 8.

    Ibid, at ix, x, 35,46, 68f.

  9. 9.

    Ibid, at 36, 50f.

  10. 10.

    Ibid, at 55.

  11. 11.

    Ibid, at 101.

  12. 12.

    ASIC ASIC Stakeholder Survey 2013, −/9/2013 at ii.

  13. 13.

    Ibid at 23.

  14. 14.

    See Maintaining Consistency with the Australian Consumer Law A guide to maintaining a harmonised and consistent approach when developing and reviewing legislation, −/7/2013, http://consumerlaw.gov.au/files/2015/09/Guide_Maintaining_consistency_with_the_ACL.pdf, last seen on 14/1/2016.

  15. 15.

    Memorandum of Understanding Between the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission, December 2004.

  16. 16.

    Commissioner for Consumer Protection v Susilo [2014] WASC 50 (Supreme Court of Western Australia); Coordinated Investigation Results in ACCC Taking action against We Buy Houses and Rick Otton regarding property strategies ACCC, Media Release MR 23/15, 3/3/2015.

  17. 17.

    See ACCC takes action against education services broker Acquire Learning ACCC Media Release MR 265/15, 17/12/2015 2015.

  18. 18.

    Wingecarribee Shire Council v Lehman Brothers Australia Limited (in Liq) [2012] FCA 1028 (Federal Court of Australia) per Rares J in ‘Summary’.

  19. 19.

    The then Trade Practices Act 1974 (Cth) (Australia) applied to all sectors of the economy. The then Trade Practices Commission became the Australian Competition and Consumer Commission in 1995.

  20. 20.

    Fraser v NRMA Holding Ltd. (1995) 55 FCR 452 (Federal Court of Australia); The HIH Royal Commission, Commonwealth of Australia, The Failure of HIH Insurance Volumes 1–3, 2003.

  21. 21.

    Commonwealth of Australia, Financial System Inquiry Final Report, (Wallis) −/3/1997.

  22. 22.

    Flight Centre Limited v Australian Competition and Consumer Commission [2015] FCAFC 104 (Full Court, Federal Court of Australia).

  23. 23.

    Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited [2015] FCAFC 103 (Full Court, Federal Court of Australia) (held not anti-competitive).

  24. 24.

    The ACCC famously has lost a number of high profile cases e.g. Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd. [2003] HCA 18, (2003) 214 CLR 51 (High Court of Australia); Google Inc. v Australian Competition and Consumer Commission [2013] HCA 1, (High Court of Australia) but it is an active litigator and generally successful.

  25. 25.

    Australian Competition and Consumer Commission v Bunavit Pty Ltd. [2016] FCA 6 (Federal Court of Australia) at [69].

  26. 26.

    Commonwealth Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Financial Products and Services in Australia (Ripoll), −/11/2009; Commonwealth Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Collapse of Trio Capital,−/5/2012; The Senate Economics References Committee, Commonwealth of Australia, Performance of the Australian Securities and Investments Commission, −/6/2014; Commonwealth Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Proposals to Lift the Professional Ethical and Education Standards in the Financial Services Industry, −/12/2014. The Senate Economics References Committee, Commonwealth of Australia, Scrutiny of Financial Advice, to report by 1/2/2016.

  27. 27.

    ASIC Annual Report 2014–2015 at 34ff.

  28. 28.

    ACCC and AER Annual Report 2014–2015 at 15, 25.

  29. 29.

    See ACCC 2015 ACCC Compliance and Enforcement Policy February 2015 at 5.

  30. 30.

    S 1 (2) ASIC Act; S 2 CCA.

  31. 31.

    It does not fall within S 961 Corporations Act 2001 (Cth) as without more the advisee would not be a retail client but is governed by S 12 DC ASIC Act.

  32. 32.

    On responsive regulation in the Australian context see The Senate, Economics Reference Committee “Regulatory theories and their application to ASIC” in Performance of the Australian Securities and Investments Commission Cth of Australia, −/6/2014 at 28.

  33. 33.

    S 219 ACL.

  34. 34.

    S 218 ACL.

  35. 35.

    S 223 ACL.

  36. 36.

    S 239 ACL.

  37. 37.

    There are voluntary codes of conduct and Ombudsman schemes in both the goods and services and financial services sectors. On a particular sector see Howell (2015), p. 544. There is currently problem with unpaid compensation following determinations made against financial advisers by the Financial Ombudsman Service see The Senate Economics References Committee, Commonwealth of Australia, Scrutiny of Financial Advice Submission No 14.

  38. 38.

    If a term is unfair, the contract stands if it can operate without the term and the term is void. This was the decision in Australian Competition and Consumer Commission v ACN 117372915 Pty Limited (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368 (Federal Court of Australia). This case involved the sale of nasal spray to men with erectile dysfunction. At [954], the following term was held void as unfair: Termination. Sexual dysfunction is a chronic condition and treatment can take some time. For this reason we stipulate that your contract with us for [sic] the period decided in the first consultation with the AMI doctor. You may cancel your treatment program with AMI at any time by giving AMI not less than 30 days notice. Cancelling your treatment program you will be entitled to a refund for the unexpired period of your treatment program less an administration fee of 15% and less the cost of any medication already provided to or prepared for you. No refund will be provided for the expired period of the treatment program or the 30 day notice period. All cancellation must be communicated to AMI in writing signed by you. Oral cancellation will not be accepted in any circumstances.” The conduct of targeting vulnerable men was also held unconscionable.

  39. 39.

    Australia has significant financial literacy programs sponsored by regulators, notably ASIC and by the private sector, notably banks. See e.g. ANZ Survey of Adult Financial Literacy in Australia, −/5/2015.

  40. 40.

    Commonwealth of Australia, Financial System Inquiry Final Report, November 2014 (Murray) at 9, 94.

  41. 41.

    Ibid at 193.

  42. 42.

    Ibid at 194.

  43. 43.

    Commonwealth of Australia (2015), p. 293.

  44. 44.

    Ibid at 305 Recommendation 21. On comparison websites and their regulation, see also ACCC and AER Annual Report 2014–2015 at 51; ACCC The Comparator Website Industry in Australia, −/11/2014.

  45. 45.

    ASIC/Latitude Insights Report 455 Consumer testing of the Choice product dashboard −/9/2014; ASIC Consultation Paper 249 Remaking ASIC Class Order on generic financial calculators: [CO 05/1122], −/12/2015.

  46. 46.

    M. Han, Former ACCC head slams successor’s plan Sims power push runs into trouble, Australian Financial Review 1, (12/1/2016). The proposal is to amend s 46 CCA to eliminate the requirement that the prohibition on use of monopoly power requires the company to ‘take advantage’.

  47. 47.

    S 18 ACL; S 12DA ASIC Act.

  48. 48.

    S 19 ACL; S 12DB ASIC Act.

  49. 49.

    Ss 20, 21, 22ACL; Ss 12CA, 12CB, 12CD ASIC Act.

  50. 50.

    S 23 ACL; S 23 ASIC Act.

  51. 51.

    Ss 44, 50 ACL; Ss 12DK, 12DJ ASIC Act.

  52. 52.

    On civil penalties in Australia see Australian Law Reform Commission, Principled Regulation Civil and Administrative Penalties in Australia [2001] ALRC 95; ASIC Report 387 Penalties for Corporate Wrongdoing March 2014.

  53. 53.

    S 224(1) ACL.

  54. 54.

    S 167 NCCPA. The first proceeding was a contravention by a person advertising that he could provide credit when he was not licensed to do so. Australian Securities and Investments Commission v ACN 092879733 Pty Ltd. [2012] FCA 923 (Federal Court of Australia).

  55. 55.

    Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd. [2014] FCA 1405 (Federal Court of Australia) at [106].

  56. 56.

    Ibid at [229].

  57. 57.

    Australian Securities and Investments Commission v G E Capital Finance Australia, in the matter of GE Capital Finance Australia [2014] FCA 701 (Federal Court of Australia) at [96], [100].

  58. 58.

    Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (High Court of Australia) at [16], [17], [22], [24].

  59. 59.

    Ibid at [24].

  60. 60.

    Ibid at [46].

  61. 61.

    Harper, Supra Note 43 at 300.

  62. 62.

    Louth v Diprose [1992] HCA 61 (High Court of Australia); on the elderly see Australian Competition and Consumer Commission v Lux Distributors Pty Ltd. [2013] FCAFC 90 (Full Court Federal Court of Australia).

  63. 63.

    Kakavas v Crown Melbourne Ltd. [2013] HCA 25 (High Court of Australia).

  64. 64.

    For a comparison of this test as recently applied in consumer protection and investor protection. See Corones (2014), p. 281.

  65. 65.

    S 115, S 128 NCCPA.

  66. 66.

    Burns (2013), p. 611.

  67. 67.

    Make it Mine Finance Pty Ltd., in the matter of Make it Mine Finance (No 2) [2015] FCA 1255 (Federal Court of Australia) at [19], [122].

  68. 68.

    Ministerial Council of Consumer Affairs, Taking Action, gaining Trust National Consumer Strategy Plan 2010–2013 p 2.

  69. 69.

    Ibid at 4, 5. On unsolicited sales in indigenous communities see Australian Competition and Consumer Commission v Titan Marketing Pty Ltd. [2014] FCA 913 (Federal Court of Australia); see also http://www.accc.gov.au/media-release/accc-takes-action-against-fdra-for-alleged-consumer-law-breaches-in-aboriginal-communities January 2016, last seen on 14/1/2016.

  70. 70.

    Avoid a funeral rip-off campaign to protect indigenous consumers NSW Fair Trading, Media Release 27/7/2015. See the Avoid a funeral rip-off video on the NSW Fair Trading YouTube channel at http://bit.ly/1KsG2V4, last seen on 14/1/2016.

  71. 71.

    Financial Counsellors Australia.

  72. 72.

    Deloitte Access Economics, The sharing economy and the Competition and Consumer Act, ACCC 2015 at v, 1ff.

  73. 73.

    Harper, Supra Note 43 at 135.

  74. 74.

    https://www.societyone.com.au/; https://www.ratesetter.com.au/, last seen on 6/1/2016.

  75. 75.

    The Act requires the credit provider to provide credit in the course of a business of providing credit in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction: S 5 (1) (d) NCCPA.

  76. 76.

    The Corporations Amendment (Crowd-sourced Funding) Bill 2015 (Cth) is currently the subject of an inquiry by the Senate Economics Legislation Committee.

  77. 77.

    On the sharing economy. See Kaplan and Nadler (2015), p. 103; In less than 2 years Uber transactions increased from 1 to 22% relative to electronic taxi transactions, Deloitte Access Economics, Supra Note 73 at 9.

  78. 78.

    Sier (2015) and McDuling (2015).

  79. 79.

    Butler (2015).

  80. 80.

    E.g. Passenger Transport Act 2014 (NSW).

  81. 81.

    Khadem (2015).

  82. 82.

    See Property, Stock and Business Agents Act 2002 (NSW).

  83. 83.

    Ss 3, 17A(2), s 165 Property, Stock and Business Agents Act 2002 (NSW).

  84. 84.

    S 22 Property, Stock and Business Agents Act 2002 (NSW).

  85. 85.

    S 173 Property, Stock and Business Agents Act 2002 (NSW).

  86. 86.

    Allen and Berg (2014).

  87. 87.

    Murray, Supra Note 40 at 188.

  88. 88.

    Google Inc. v Australian Competition and Consumer Commission [2013] HCA 1 (High Court of Australia) at [68]–[70].

  89. 89.

    Part 111A Privacy Act 1988 (Cth). There is also voluntary comprehensive credit reporting to share positive credit data. The FSI Report recommended there should be a review of this in 2017 Murray, Supra Note 40 at 190.

  90. 90.

    Accenture (2015), p. 9.

  91. 91.

    Ibid at 6, 7.

  92. 92.

    Yeates (2016).

  93. 93.

    S 12 Privacy Act 1988 (Cth) Schedule 1. There are restrictions on this: s 12.2; s 12.3.

  94. 94.

    Executive Office of the President (2013), pp. 8, 9.

  95. 95.

    Harper, supra Note 43 at 303.

  96. 96.

    Director of Consumer Affairs Victoria v Alpha Flight Services Pty Ltd. [2014] FCA 1434 (Federal Court of Australia).

  97. 97.

    Australian Competition and Consumer Commission v Safety Compliance Pty Ltd. (in liq) (No 2) [2015] FCA 1469 (Federal Court of Australia); Safety Compliance Pty Ltd. and individuals ordered to pay penalties for misleading small businesses ACCC MR 274/15, 23/12/2015.

  98. 98.

    S 104, S 105 ACL.

  99. 99.

    S 105 (1) ACL. On the role of Standards Australia see Harper supra Note 43 at 136, Box 10.8.

  100. 100.

    S 194 ACL.

  101. 101.

    Products recalled in 2014–2015 include frozen berries, infinity electrical cable and vehicle airbags.

  102. 102.

    S 131, S 132 ACL.

  103. 103.

    For instance ISO/TS 20245:2014 is a standard for cross border exchange of second hand goods.

  104. 104.

    Harper, Supra Note 43 at 135f.

  105. 105.

    Standards Australia Forum on AS/NZS 1698: 2006 Protective helmets for vehicle users February 19 2015; R. Sims, Chairman ACCC, Keynote Presentation: Australasian Consumer Law Roundtable 2015 1/12/2015.

  106. 106.

    Harper Supra Note 43 at 139, 140 Recommendation 10.

  107. 107.

    Both Australia and New Zealand are also members of the OECD Committee on Consumer Policy.

  108. 108.

    http://www.scamwatch.gov.au/types-of-scams/buying-or-selling/online-shopping-scams, last seen 12/1/2016.

  109. 109.

    Gawith (2006), p. 115.

  110. 110.

    ASIC Regulatory Guide 54 Principles for Cross Border Regulation −/6/2012.

  111. 111.

    Deloitte Access Economics, Supra Note 73 at vii.

  112. 112.

    http://www.icpen.org/, last seen 8/1/2016.

  113. 113.

    Internet sweep shows improvements to disclosure in online booking processes ACCC MR 258/15, 16/12/2015.

  114. 114.

    Australian Competition and Consumer Commission v Jetstar Airways Pty Limited [2015] FCA 1263 (Federal Court of Australia) [33]–[41].

  115. 115.

    It was held that extended warranties are financial services in Australian Competition and Consumer Commission v Fisher & Paykel Customer Services Pty Ltd. [2014] FCA 1393 (Federal Court of Australia) at [26].

  116. 116.

    There is a wide interpretation of standard form contract. In Australian Competition and Consumer Commission v Chrisco Hampers Australia Limited [2015] FCA 1204 (Federal Court of Australia) a contract which had an opt out term and under which consumers could select items from a catalogue was a standard form contract.

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  1. Business School, University of Sydney, Sydney, NSW, Australia

    Gail Pearson

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  1. Faculty of Law, Federal University of Rio Grande do Sul, Porto Alegre, Brazil

    Claudia Lima Marques

  2. Faculty of Law, University of Macau, Macau, Macao

    Dan Wei

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Pearson, G. (2017). Further Challenges for Australian Consumer Law. In: Lima Marques, C., Wei, D. (eds) Consumer Law and Socioeconomic Development. Springer, Cham. https://doi.org/10.1007/978-3-319-55624-6_20

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