"The Australian Competition and Consumer Commission is continuing its active GST enforcement role to ensure that consumers are protected from potential price exploitation or misleading and deceptive conduct following the introduction of the GST," Acting ACCC Chairman, Mr Allan Asher, said today.
"In addition to the ACCC's extensive monitoring of prices of goods following the introduction of the GST, the ACCC has maintained a strong focus on achieving quick and effective enforcement outcomes to benefit consumers".
Recent GST enforcement outcomes include:
Ecom Computers
Ecom Computers published a newspaper advertisement in the Icon section of the Sydney Morning Herald on 27 May 2000 which stated that customers could "Beat the GST" in relation to computer packages. The ACCC was concerned that the representations may have misled customers into buying computer packages in the belief that the price of computer packages would rise following the introduction of the GST.
Ecom Computers has provided court enforceable undertakings to:
- cease making future representations about the prices of computer packages without explaining the reasonable basis for making such representations;
- provide refunds to consumers who may have been misled by its representations;
- run a corrective newspaper advertisement; and
- implement a trade practices compliance program.
The ACCC was satisfied with Ecom's response to its concerns about the potential for consumer detriment arising from the alleged misrepresentation. As shown by the ACCC's recent price monitoring findings, the prices of computer products have reduced by around 5% in line with the ACCC's expectations following the introduction of the GST.
Express Promotions
Express Promotions ran a promotion which encouraged businesses to use their $200 GST Direct Assistance Certificate ("GST certificate") with the company. The promotional forms included statements such as "Do you want $200 worth of free stationery?" with only some forms having a disclaimer to the statement in small font: "By using your $200 GST Direct Assistance Certificate". For a business that expressed interest, Express Promotions sent a kit that included a covering letter entitled "You want $200 worth of free stationery?" The kit included an order form. The business was asked to return its completed order form and GST Certificate to obtain stationery. Only businesses who completed the kit and sent their GST certificate were provided stationery.
On 28 June 2000, the ACCC wrote to Express Promotions alerting it to its concern that Express Promotions may have engaged in conduct that was misleading or deceptive contrary to section 52 of the Trade Practices Act 1974. The ACCC expressed concern that the promotional forms would mislead consumers into believing they could obtain free stationery when in fact they had to use a GST certificate to obtain the stationery.
Express Promotions has provided court enforceable undertakings to:
- cease using the promotional forms and kit
- send apologies to all people who were sent the promotional forms
- offer refunds to consumers who purchased stationery believing that it was free; and
- implement a trade practices compliance program.
Express Promotions responded quickly to ACCC concerns about the potentially misleading effects of its marketing material. It is the ACCC's position, and one which has been acknowledged by the Courts, that extreme care must be taken by businesses which seek to use the word "free" in relation to the supply of goods or services in their advertising material. The word "free" creates a clear expectation in the mind of consumers which is difficult to displace through the use of qualifying terms or small print.
Amazing Fences
From 1 May 2000 Amazing Fences sent invoices to 216 customers for the building of fences that included a sale amount and an amount for GST. The invoices included a statement that: "If payment received prior to 30 June 2000, please deduct 10% GST". The ACCC was concerned that Amazing Fences may have contravened s53(e) of the Trade Practices Act 1974 by representing that GST was payable on accounts for goods and services supplied before 1 July 2000 where the account was paid after that date. Further, that if Amazing Fences actually received an amount for GST on goods and services supplied before 1 July 2000 then it may engage in price exploitation in breach of s75AU of the the Trade Practices Act 1974.
Amazing Fences has provided court enforceable undertakings to:
- cease representing that GST is payable on goods and services supplied before 1 July 2000;
- send corrective letters to all affected customers;
- not charge or seek to charge GST for goods and services supplied before 1 July 2000 and to refund any money already collected; and
- implement a trade practices compliance program.
The ACCC was satisfied that the conduct of Amazing Fences had arisen from a failure to appreciate the effect of the GST on goods and service supplied prior to 1 July 2000 but paid for after that date. As a general rule, businesses must be aware that GST is not chargeable on goods and services which were supplied, or available for collection, prior to 1 July 2000.
"In each of the above cases, the business responded positively to the ACCC's concerns. It is important for businesses to recognise that the vast majority of ACCC enforcement action is driven by consumer complaints. Accordingly, an enquiry from the ACCC should signal to businesses not only that they may have contravened the Trade Practices Act 1974 but also that their own customers have felt sufficiently aggrieved by the businesses conduct to lodge a formal complaint with the ACCC. In some cases, consumers had raised their concerns with the business before turning to the ACCC".