3 November, 2018
Changes include additional single figure pricing rules, a right for publicly-listed companies to claim unconscionable conduct and greater powers to investigate unfair contract terms and product safety
What you need to know
On 18 October 2018, Parliament passed a series of changes to the Australian Consumer Law drawn from the April 2017 Final Report of the Australian Consumer Law Review.
Significant changes include amendments to the single figure pricing provisions to address pre-selected options, extending the unconscionable conduct protections to publicly-listed companies, permitting the ACCC and ASIC to use their investigative powers in relation to potentially unfair contract terms and extending the ACCC's powers to enable it to require third parties to produce safety-related documents/information.
The majority of the amendments will take effect the day after the Bill receives Royal Assent (usually 7-10 days after it is passed by both Houses). Notably, the changes to single figure pricing will only apply to acts or omissions which occur 12 months after the commencement of the Bill, allowing time for websites to be updated.
What you need to do
If your business sells goods or services online and offers additional options at extra cost, you should revisit your approach to headline pricing to ensure you are including all necessary amounts in the single figure price. This should include any options specifically added by the consumer or "pre-selected" by the supplier.
Update your compliance materials to ensure your business is training its people on the most recent developments in the law.
Parliament passes more changes to the Australian Consumer Law
Parliament has passed amendments to the Competition & Consumer Act 2010 (CCA), the Australian Consumer Law (ACL) and the ASIC Act, to give effect to a number of proposals made in the Australian Consumer Law Review Final Report (ACLR Final Report), which was published by Consumer Affairs Australia and New Zealand (CAANZ) in April 2017. The amendments are intended to "clarify and strengthen" consumer protections.
The amendments make changes to the provisions relating to consumer guarantees, unsolicited consumer agreements, product safety, false billing, unconscionable conduct, pricing and unfair contract terms.
We have briefly summarised the amendments below.
Extending ACCC and ASIC's investigative powers to assessing possible unfair contract terms
Under the current provisions of the CCA and Australian Securities & Investments Commission Act 2001 (ASIC Act), the ACCC and ASIC may only use their investigative powers in relation to contraventions or potential contraventions of those Acts.
Inclusion of or reliance on an unfair contract term in an agreement does not result in a contravention or a possible contravention of either of the Acts. Instead, the term is treated as void and unenforceable.
This distinction in the treatment of unfair contract terms (which the ACCC is currently lobbying to change) has meant that the ACCC and ASIC have not been able to use their investigative powers in relation to unfair contract terms.
While the Bill does not alter this distinction, the amendments in the Bill will permit the ACCC and ASIC to use their powers to investigate the terms of a consumer contract or small business contract, for the purposes of determining whether to bring proceedings seeking a declaration that a term is unfair.
These amendments apply in relation to contracts entered into on or after the Bill commences.
Extending unconscionable conduct protections to publicly listed companies
Prior to these amendments, the unconscionable conduct protections in section 12CB of the ASIC Act and section 21 of the ACL did not extend to publicly listed companies. The amendments have changed this position.
According to the ACLR Final Report, the rationale for this amendment is that the exclusion (of publicly listed companies) is inconsistent with the generic nature of the ACL and that the rationale for the previous distinction is unclear, as public-listing is "not necessarily a reflection of a trader's ability to withstand unconscionable conduct" (at p 48).
The protections for publicly-listed companies will apply in relation to acts or omissions that occur on or after the commencement of the Bill.
Requiring single price amounts to include pre-selected options
The single-figure price provisions of the ACL require that suppliers prominently display the minimum quantifiable single price payable for their goods or services. However, charges that are optional do not have to be included in this single price. The Bill amends this exception to deal with the increasingly common problem of online sales of goods or services with pre-selected options (ie options which have not been specifically added by the consumer), which do not represent the total price of the goods or services once those options are taken into account.
Following the amendments, a seller must include in the single price a charge payable by the customer unless the charge is optional, and at or before the time of the price representation either (i) the consumer de-selected the charge, or (ii) the consumer has not expressly requested that the charge be applied. Part (ii) would seem to apply in circumstances where the option has not been pre-selected.
In other words, where a charge is optional and the consumer has either de-selected it (in the case of pre-selected options) or has not expressly requested that the charge apply (in the case of not pre-selected options), the charge may be excluded from the single figure price. Otherwise, all optional amounts which are pre-selected by the supplier or added by the consumer must be included in the single price.
The amendments apply to acts or omissions which occur on or after the day that is 12 months after commencement of the Bill. This is to enable sellers sufficient time to alter their systems to comply with the new pricing requirements.
Empowering the ACCC to compel production of product safety information from third parties
Under section 133D of the CCA, the Commonwealth Minister or an ACCC inspector has power to issue a "disclosure notice" to obtain information or documents about the safety of consumer goods or services.
However, disclosure notices can only be issued to a supplier of those goods or services.
This has meant that the ACCC has not been able to compel third parties who may hold relevant information related to the safety of goods or services (such as test laboratories, safety consultants etc), to produce that information.
The amendments broaden the power, to enable the Minister or ACCC inspector to issue a disclosure notice to a third party. Refusal or failure to comply with a disclosure notice is an offence.
Clarifying unsolicited consumer agreements can be struck in public places
The Bill makes an amendment to clarify that the unsolicited consumer agreement provisions of the ACL will apply where a dealer meets a consumer away from the supplier's premises, including a public place. This change resolves an uncertainty that had arisen following the judgment of Justice Reeves in ACCC v ACN [2016] FCA 403 (at [137]) in relation to whether agreements struck in public places met the definition of "unsolicited consumer agreements".
The amendments apply to acts or omissions that relate to agreements entered into on or after the Bill commences.
Clarifying that the ACL protections in the ASIC Act apply to financial products
The ASIC Act contains a number of consumer protection provisions that are intended to mirror the provisions of the ACL in relation to misleading or deceptive conduct, false or misleading representations, unconscionable conduct, harassment and coercion, etc.
These provisions of the ASIC Act are drafted to expressly apply to "financial services". However this has created some technical uncertainty about the application of the ACL protections to "financial products".
The Bill amends the ASIC Act to clarify that the consumer protections that currently apply to "financial services" also apply to "financial products".
These amendments apply in relation to acts or omissions which occur on or after the day the Bill commences.
Clarifying the consumer guarantees applicable for transport and storage of goods
Section 63(a) of the ACL provides an exception to consumer guarantees in relation to services that are supplied under "a contract for or in relation to the transportation and storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported."
The High Court had interpreted the words "by the person for whom the goods are transported" as meaning the buyer or the seller, which had the unusual effect of limiting the recourse that consumers had to suppliers where a supplier was a business.
The Bill clarifies that this exception will only apply where the goods that are being transported relate to a consignee's business (not the consignor's). The consumer guarantees will apply in relation to services supplied under a contract for transport or storage of goods, where those goods are for the personal use of the consignee.
This clarification applies to services which are supplied under a contract entered into on or after the day the Bill commences.
Allowing litigants to rely on admitted facts from earlier ACL proceedings
The Bill has made amendments which are intended to make it easier for consumers to bring proceedings for a contravention of the ACL by allowing them to rely on admissions of fact made by a respondent in earlier proceedings as prima facie evidence of those matters in subsequent proceedings. (Previously, only findings of fact by the Court, not admissions by the respondent, could be relied upon.)
The change is intended to reduce the cost of bringing private follow-on proceedings for contraventions of the ACL (for example, after ACCC proceedings). It also ensures that the evidentiary rules in relation to proceedings for a contravention of the ACL are consistent with the equivalent provisions in relation to contravention of the competition provisions. Those provisions were amended in this same way in 2017, following the Competition Policy Review (Harper Review). This amendment applies in relation to findings of fact or admissions of fact made on or after the commencement of the Bill.
Expanding ACL remedies to permit a court to require a person to engage a third party to perform a community service order
Under current provisions of the ACL, where a person has contravened the ACL, the ACCC may seek that a court impose a community service order in relation to that person.
The Bill amends the ACL to allow a court to make a community service order which requires the person to engage a third party to perform the service on their behalf. This may be ordered in circumstances where it is not appropriate that the person perform the service themselves.
This amendment will apply to orders relating to acts or omissions which occur on or after the day the Bill commences.
Other amendments
Lastly, the Bill also makes couple of other more technical amendments.
Firstly, it amends the definition of "unsolicited services" in subsection 2(1) of the ACL to clarify that it includes unrequested services which are purported to have been supplied but have not actually been supplied. This change closes a gap in the previous drafting which made it difficult for regulators to take action under the false billing provisions of the ACL in circumstances where goods or services had not actually been supplied.
Secondly, it amends the language of section 12DC of the ASIC Act (false or misleading representations in relation to financial products that involve land) to refer to the "supply or possible supply" (instead of the "possible sale or grant") of a financial product that includes an interest in land. This amendment is to ensure consistency in the language throughout the ASIC Act. The amendments also clarify that the consumer protections apply to a financial product that includes an interest in land, where the representation occurred prior to the acquisition of the land.
These amendments apply to acts or omissions that occur on or after the Bill commences.
Commencement
The entire Bill commences on the day after it receives Royal Assent (usually 7-10 days after it is passed by both Houses). However, you need to note that the single figure pricing amendments do not take effect until 12 months after this date.
For further information, please contact:
Justin Jones, Partner, Ashurst
justin.jones@ashurst.com
