ACCC releases latest small business report: new Franchising Code and online education highlight recent activities

23 February 2015

Growing numbers of small businesses are looking to the Australian Competition and Consumer Commissioner for advice and guidance, according to latest data from the national competition & franchising regulator.

Over 7, 000 people have contacted the ACCC in last six months with a small business or franchising related complaint or enquiry, and more than 8,000 people have completed the ACCC’s three free online education programs for small businesses, tertiary students and franchisees. There were also some 333 000 visits to the ACCC’s business webpages over the same time.

The latest edition of the ACCC’s Small business in focus report, released today, shows that small business contacts continue to increase, as does franchisee enquiries.

“The new mandatory national Franchising Code of Conduct came into effect on 1st January, and has generated a great deal of interest. More people than ever before are coming to the ACCC for advice and guidance on how to assess a franchising opportunity or resolve a franchising related dispute,” ACCC Deputy Chair Dr Michael Schaper said.

Misleading conduct and false representations remained the most widely reported small business issue over this six month period, with over 2000 complaints received by the ACCC’s Infocentre.

In addition to its educational activities, the ACCC continued to make use of various law enforcement tools to achieve compliance with the CCA, including securing several court decisions with relevance for small businesses.

The ACCC instituted proceedings against the franchisor of Electrodry Carpet Cleaning, alleging that it was involved in the posting of fake online testimonials and inducing its franchisees to do the same.

“While online testimonials can be a useful and genuine marketing tool, it is important that online businesses understand that making or inducing false or misleading representations and testimonials breaches the law,” Dr Schaper said.

Additionally, following proceedings initiated by the ACCC alleging that Coles took advantage of its superior bargaining position to demand money from suppliers that it was not lawfully entitled to, the Federal Court declared that Coles engaged in unconscionable conduct and ordered it to pay penalties of $10 million and costs. Coles also undertook to provide redress options for over 200 suppliers.

“This should send a clear signal to larger businesses generally about appropriate business conduct in commercial dealings with smaller suppliers,” Dr Schaper said.

The Small business in focus report also provides a warning to small businesses to remain wary. The ACCC recorded $105,000 lost to false billing scams targeted at small business.

“False billing scams continue to be the most common scam targeting the small business community. Often a scam is disguised as an outstanding invoice to get the business to sign-up for unwanted advertising or office supplies. Another common approach involves sending invoices for the renewal of a non-existent domain name registration,” Dr Schaper said. Further information on scams is available at Scamwatch.

The Small business in focus report is available online.

Release number: 
MR 14/15
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