You know that satisfying point when you click ‘buy now’ on the web page. Shortly, someone in London or Paris will be packing your high‑fashion item and posting it to you. In a few days it will arrive, fresh in your mailbox in Australia.
These days, buying online is a common experience for Australian consumers. They are buying from local retailers online and buying internationally. Market research conducted by Roy Morgan Single Source for the Australian Communications and Media Authority (ACMA), shows that roughly half the people who had used the Internet in the four weeks before the survey had done so for shopping or banking.
But as the prevalence of online retailing has risen, so have concerns among consumers as to whether their rights are being protected.
In the six months to 30 April 2012, about 30 per cent of the 76 800 complaints and inquiries received by the ACCC’s Infocentre included an aspect of online business or online conduct. Many of the inquiries and complaints were about online retailing, including travel, appliances, computer equipment, banking and investment, and group discount sites.
The Chairman of the ACCC, Rod Sims, has been emphasising the ACCC’s message about the online and digital economies since late last year.
Mr Sims says consumers are entitled to the same consumer protection when they buy something online in Australia as when they buy it by any other means. ‘So that means statutory consumer guarantees, for example, which are provided for in the Competition and Consumer Act 2010, apply if I buy my new running shoes online the same way they apply if I buy them in a shopping mall.’
Further, the ACCC has stepped‑up its focus on the online and digital economies with particular attention to ensuring competition law is applied. As in the ‘bricks and mortar’ economy, businesses that are trading online are required by law to ensure they don’t engage in anti‑competitive practices, such as price‑fixing or misusing market power
Mr Sims says the ACCC’s overall aim, with regard to competition, is to ensure that the benefits that the online and digital economies can provide are not eroded by anti‑competitive practices.
‘The digital economy can provide lower prices, innovative business models and other potential benefits including immediacy, convenience, and a wider range of choice for consumers. Our aim is to make sure those benefits are maximised.’
Mr Sims is warning businesses to be diligent in observing the law. ‘I hear anecdotal remarks that indicate to me some businesses think anything goes when they are trying to compete with an online business. That’s not the case.
‘The same consumer and competition law applies, whether you are in cyberspace or on Collins St. There are no exceptions in consumer or competition law for online businesses.’
Another feature of cyberspace is that Australian consumers are often dealing with foreign or multi‑national corporations when transacting online. The recent case involving Apple Pty Ltd serves to highlight that the Australian Consumer Law applies to all companies wherever they are based which trade in Australia, be it online or traditionally.
In the Federal Court on 21 June, Justice Bromberg imposed on Apple civil pecuniary penalties of $2.25 million for misleading and deceptive conduct in relation to Apple’s promotion of its ‘iPad with WiFi + 4G’ product in Australia.
Apple promoted the ‘iPad with WiFi + 4G’ from 8 March 2012 to 12 May 2012 on its website, its online store, and in its retail store. Apple resellers also promoted the‘iPad with WiFi + 4G’ online and in their stores using promotional materials supplied by Apple.
However, the ‘iPad with WiFi + 4G’ could not connect to any networks which have been promoted in Australia as 4G networks, in particular Telstra’s LTE network. The ACCC brought proceedings against Apple over the 4G claims.
The Federal Court declared that Apple’s conduct in making the claims was liable to mislead the public as to the characteristics of the device, in contravention of section 33 of the Australian Consumer Law. Apple agreed to the declaration and consented to the penalties and orders.
In remarks he made in imposing penalties, Justice Bromberg said: ‘Multi‑national corporations who (through their subsidiaries or otherwise) operate in and profit from the Australian market, must respect that market and the laws which serve to regulate it and protect its participants.’ In the case of Apple, he found that ‘Apple’s desire for global uniformity was given a greater priority than the need to ensure compliance with the Australian Consumer Law.’
In another case which concluded in the Federal Court last year, Ticketek was ordered to pay a penalty of $2.5 million for taking advantage of its market power to deter or prevent a newly‑established online competitor, Lasttix.
Lasttix was set‑up to sell ‘last minute deals’ to shows and events. The Federal Court found Ticketek had used its market power—on four occasions in 2009 and 2010—to stop Lasttix from offering consumers deals for show tickets.
The Court found that Ticketek’s market power allowed it to do things it may not have been able to do in a more competitive environment.
‘Cases like Ticketek underline the need for businesses to ensure they aren’t engaging in anti‑competitive practices in order to stop or obstruct an online competitor,’ Mr Sims says.
Mr Sims acknowledges that consumers who are buying internationally may face particular hurdles in ensuring they enjoy consumer protection. Mr Sims says consumers buying internationally should keep in mind that they may not enjoy the consumer protection that is provided in Australian law.
‘Consumers who buy from offshore via online businesses should pay particular attention to the contract and the terms and conditions.'
‘Even if they are buying from a country that has strong consumer protection provisions in law, it can be hard to call on that protection from a distance.’
Nonetheless, most businesses that are operating online and internationally are legitimate and maintain high standards of service.
Consumers who have difficulties with an international business can complain to the consumer protection agency in the country where the firm is located. They can also log‑on to econsumer.gov, a multilingual complaint site that is used by consumer protection authorities around the world as an initiative of the International Consumer Protection and Enforcement Network (ICPEN).
A report to econsumer.gov will go into a complaints database, shared with consumer protection agencies in other countries, which can use it to investigate companies and individuals, and to uncover scams. There is no guarantee that an international agency will follow up individual complaints. That depends on its policies and practices.
