False and misleading conduct key issue for small businesses

24 February 2020

Reports to the ACCC by small businesses about false and misleading conduct by other businesses including suppliers increased by eight per cent, totalling more than 900, in the six months to 31 December 2019.

This issue continues to be the Australian Consumer Law issue most commonly affecting small businesses, and accounts for over a third of small business reports made to the ACCC, according to the latest Small Business in Focus Report, published today.

“We are concerned about the increase in reports from small businesses about false and misleading conduct, and remind businesses they must ensure their representations to both consumers and business counterparts are accurate and honest,” ACCC Deputy Chair Mick Keogh said.

“The ACCC will take action when we become aware of misleading and deceptive conduct, especially when that conduct has the potential to result in widespread harm.”

“A recent example was our investigation into concerns that Coles Group may not have fully passed on to Norco a milk price rise, as it claimed it would in its marketing materials. As a result of ACCC action, Coles committed to paying Norco dairy farmers around $5.25 million,” Mr Keogh said.

Franchisors not acting in good faith towards franchisees continues to be the most commonly reported conduct under the Franchising Code. Another common issue was inadequate disclosure, which accounted for 14 per cent of franchising reports, and was a key issue of the ACCC’s targeted compliance checks in the café, take away and restaurant sector in 2019.

“We are continuing our work to educate franchisees that franchising, like other businesses, involves risks and to remind franchisors of their obligations,” Mr Keogh said.

“We’ve developed resources including a guide to help franchisees understand their disclosure document, and a guide for franchisors about what a disclosure document should look like.”

The ACCC frequently hears concerns being expressed by small businesses that are subject to onerous contract agreements with large businesses. We are  continuing to take enforcement action on these issues, and recently, Uber Eats committed to changing its contracts with restaurants following an investigation by the ACCC which raised concerns that certain contract terms may be unfair.

The ACCC continues to advocate for changes to business-to-business unfair contract term laws including the inclusion of penalties for non-compliance.

“This work highlights the importance of our enforcement and compliance activities to benefit small businesses more broadly,” Mr Keogh said. 

The ACCC will also be working closely with farmers and processors to educate them about their rights and obligations under the new Dairy Code of Conduct, which came into effect in January this year.

“Our dairy inquiry concluded that a mandatory code was the best way to address systemic industry problems such as imbalanced bargaining power between processors and farmers, so we are pleased to see that this has become reality,” Mr Keogh said.

The Small Business in Focus report is published twice yearly and provides a summary of the ACCC’s work and activities in the small business, franchising, and agriculture sectors.

The ACCC has also published a range of resources to support small businesses, which are available on our website.
 

Release number: 
22/20
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