ACCC & AER annual report 2017-18

Deliver priority consumer law outcomes: Actions undertaken to achieve our purpose

Deliverable 2.1: Deliver outcomes to address harm to consumers and small businesses resulting from non-compliance with the Australian Consumer Law

The ACL gives the ACCC a range of remedies and powers to effectively respond to possible breaches of fair trading and consumer protection laws. To enforce these consumer protection laws, we:

  • institute court proceedings. This year, we commenced 14 new consumer protection and business protection related court proceedings
  • accept court enforceable s. 87B undertakings where a breach, or a potential breach, might otherwise justify litigation. This year, we accepted 25 consumer protection related s. 87B undertakings
  • issue infringement notices. The payment of an infringement notice is not taken as an admission. This year, we received payment for 16 infringement notices from seven traders, with penalties totalling $183 600
  • accept an administrative resolution. These generally involve a business agreeing to stop a particular type of conduct, compensate consumers and take other measures to ensure that the conduct does not recur. This year, we resolved a number of matters administratively, with seven matters resolved through a formal administrative resolution.

The ACCC action relates to consumer issues in a range of businesses and priority areas, including health and medical, vulnerable and disadvantaged consumers, Indigenous Australians and product safety.

A complete list of commenced and concluded proceedings is included in appendix 9.

Our Compliance and Enforcement Policy governs our annual priorities in this area. In line with these, in this section we have grouped our outcomes under:

  • vulnerable and disadvantaged consumers
  • Indigenous Australians
  • consumer guarantees
  • new car retailing
  • telecommunications, including broadband services
  • health and medical, including private health insurance
  • small business, including breaches of the Franchising Code of Conduct, new unfair contract terms laws and compliance with excessive payment surcharge laws
  • scam disruption
  • other consumer protection outcomes, including truth in advertising, commission-based sales, online consumer issues and non-compliance with court orders.

Vulnerable and disadvantaged consumers

We actively address business practices that affect the interests of vulnerable and disadvantaged consumers, particularly where awareness of consumer rights is low. Where awareness of consumer rights is low, there is more scope for opportunistic business practices. We address this through education about consumer rights and issues as well as enforcement action.

Consumer rights may be less known by people:

  • who are elderly
  • who are newly arrived in Australia or from a non-English-speaking background
  • with a disability or illness
  • with low reading, writing and numerical skills
  • who are from a low socio-economic background
  • who are homeless
  • who are living in remote areas.

Conduct that affects Indigenous Australians, particularly in remote areas, is an enduring priority area for the ACCC. It overlaps with the outcomes achieved for vulnerable and disadvantaged consumers.

Vulnerable and disadvantaged consumers are often subject to unfair or high-pressure sales tactics and misleading and deceptive conduct as well as unconscionable conduct. Unconscionable conduct is defined as conduct that is so harsh it goes against good conscience as judged against the norms of society.

In recent years, enforcement action has focused on false or misleading representations made by colleges and brokers engaged in door-to-door or face-to-face marketing of VET FEE-HELP courses across various parts of Australia. In 2017–18, proceedings continued on several of these matters, including Unique International College Pty Ltd, Phoenix Institute of Australia Pty Ltd, Cornerstone Investment Australia Pty Ltd trading as Empower Institute, and Australian Institute of Professional Education Pty Ltd (AIPE).

In addition to these ongoing proceedings, the ACCC was involved in a number of other matters with the aim of protecting vulnerable and disadvantaged consumers. See tables 3.19, 3.20 and 3.21 for more details of these matters.

Case study: Protection of vulnerable and disadvantaged consumers—Get Qualified Australia Pty Ltd

In August 2017 the Federal Court ordered Get Qualified Australia Pty Ltd (Get Qualified) to pay an $8 million penalty and its sole director, Mr Adam Wadi, to pay a penalty of $500 000. This is one of the highest penalties ever awarded for breaches of the ACL.

The Federal Court found that Get Qualified made false or misleading representations and engaged in unconscionable conduct in its supply of services to consumers seeking recognition of their prior learning to gain qualifications.

Justice Beach stated that the ‘education sector has been infected by the parasitic practices of operators preying upon the vulnerable and the unwary’ and that Get Qualified’s conduct was ‘serious, extensive and deliberate’.

The Court also made declarations that Get Qualified:

  • made false or misleading representations and engaged in unconscionable conduct in its supply of services to consumers seeking recognition of their prior learning to gain qualifications
  • imposed an unfair contract term and entered into unsolicited consumer agreements by making uninvited sales phone calls to people, failing to disclose the full terms of the agreement and requiring payment within 10 business days.

Mr Wadi was found to be knowingly concerned in this conduct. In addition to ordering Mr Wadi to pay a penalty of $500 000, the Court made an order disqualifying Mr Wadi from managing a corporation for seven years.

Get Qualified was placed into liquidation in March 2017 and did not defend the case at trial.

Court cases

The following case commenced in 2017–18.

Table 3.19: Vulnerable and disadvantaged consumers proceedings commenced

Equifax Pty Ltd

Conduct

commenced

jurisdiction

16 March 2018

Federal Court Sydney

The ACCC instituted proceedings against credit reporting body Equifax Pty Ltd (formerly Veda Advantage Pty Ltd) alleging that, between June 2013 and March 2017, Equifax made a range of false or misleading representations to consumers in breach of the ACL.

The ACCC also alleges that Equifax acted unconscionably in its dealings with vulnerable consumers by making false or misleading representations and using unfair tactics and undue pressure when dealing with people in financial hardship.

The following cases were ongoing at the end of 2017–18.

Table 3.20: Vulnerable and disadvantaged consumers proceedings ongoing

ACM Group Ltd

Conduct

commenced

jurisdiction

2 June 2016

Federal Court Sydney

The ACCC alleges that, between 2011 and 2015, ACM engaged in misleading or deceptive conduct, harassment and coercion, and unconscionable conduct in debt collection dealings with two consumers. In each case, the debt being pursued had been sold to ACM by Telstra.

Australian Institute of Professional Education Pty Ltd

Conduct

commenced

jurisdiction

31 March 2016

Federal Court Sydney

The ACCC and the Commonwealth allege that AIPE made false or misleading representations and engaged in unconscionable conduct when marketing and selling VET FEE-HELP funded courses between 1 May 2013 and 1 December 2015 in New South Wales (NSW), Queensland and Western Australia (WA).

Cornerstone Investment Australia Pty Ltd t/a Empower Institute

Conduct

commenced

jurisdiction

9 December 2015

Federal Court Sydney

The ACCC alleges that, from March 2014, Empower made false or misleading representations and engaged in misleading or deceptive and unconscionable conduct when marketing and selling VET FEE-HELP funded courses to consumers in remote communities and low socio-economic areas in NSW, WA, Victoria, Queensland and South Australia (SA).

Phoenix Institute of Australia Pty Ltd and another

Conduct

commenced

jurisdiction

24 November 2015

Federal Court Sydney

The ACCC alleges that Phoenix made false or misleading representations and engaged in unconscionable conduct when marketing and selling VET FEE-HELP funded courses between January 2015 and October 2015 in NSW, Victoria, Queensland, Northern Territory (NT) and WA.

Unique International College Pty Ltd (appeal)

Conduct

commenced

jurisdiction

status

27 October 2015

Federal Court Sydney

On 30 June 2017 the Federal Court found that Unique made false or misleading representations and engaged in a pattern of behaviour that amounted to unconscionable conduct in breach of the ACL.

Unique appealed against the Court’s decision. The ACCC and the Commonwealth (on behalf of the Department of Education and Training) have since filed a cross-appeal. Both the appeal and cross-appeal will be heard on a date to be fixed by the Full Federal Court.

ACCC alleged that Unique made false or misleading representations and engaged in misleading or deceptive and unconscionable conduct when selling VET FEE-HELP funded courses between July 2014 and September 2015 in NSW.

The following cases were finalised at the end of 2017–18.

Table 3.21: Vulnerable and disadvantaged consumers proceedings finalised

Get Qualified Australia Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

30 March 2017

30 August 2017

Federal Court Melbourne

The Federal Court ordered penalties of $8 million against Get Qualified.

It also ordered penalties of $500 000 against Get Qualified’s sole director, Mr Adam Wadi, and an order disqualifying Mr Wadi from managing a corporation for seven years.

The ACCC alleged that Get Qualified Australia made false or misleading representations and engaged in misleading and unconscionable conduct in connection with its supply of services to consumers seeking recognition of their prior learning to gain qualifications.

Swishette Pty Ltd and Letore Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

30 March 2017

12 February 2018

Federal Court Melbourne

The Federal Court ordered Letore to compensate victims of a permanent residency program for amounts they paid to Clinica.

The ACCC alleges that Swishette and Letore were directly or indirectly knowingly concerned in false, misleading and unconscionable conduct engaged in by Clinica Internationale Pty Ltd in relation to a program offering permanent residency to migrants between August 2012 and June 2013.

Consumers with disability

In 2017–18 the ACCC continued to educate consumers with disability as well as businesses and not-for-profit organisations in the NDIS about their rights and obligations under the ACL. To coincide with the International Day of People with Disability on 3 December 2017, the ACCC and other ACL regulators delivered a second education campaign emphasising the need for providers under the NDIS to treat consumers fairly and to understand their competition obligations.

The ACCC promoted a series of resources that are designed to cater to different levels of comprehension and literacy. The resources, which were first released in 2016, include an industry guide, a consumer guide, a factsheet, an Easy English guide (translated into eight languages), stakeholder training PowerPoint presentations and two educational videos. The videos are available in a variety of accessibility formats, including closed captions, AUSLAN with audio descriptions and DVD.

Indigenous Australians

In 2017–18 conduct affecting Indigenous Australians remained an enduring priority. This recognises that certain conduct in breach of the CCA has the potential to specifically affect the welfare of Indigenous Australians. We also recognise that Indigenous Australians, particularly those living in remote areas, continue to face challenges in asserting their consumer rights. This means that we will always prioritise our work in this area while challenges remain.

Our work this year has also aimed to assist Indigenous Australians by:

  • raising awareness of their rights
  • improving access to services
  • increasing our capacity to detect unscrupulous traders operating in remote communities
  • vigorously enforcing the law.

In September 2017, ministers endorsed the National Indigenous Consumer Strategy (NICS) 2017–2019 Action Plan. NICS members are the ACCC, ASIC, state consumer affairs agencies and the Indigenous Consumer Action Network. NICS members work together to ensure that issues that affect Indigenous Australians are given priority within each of the agencies and organisations.

The NICS 2017–2019 Action Plan acknowledges that certain business practices continue to have a disproportionate effect on Indigenous Australians, particularly those who live in remote and regional areas. The NICS 2017–2019 Action Plan includes priority areas such as:

  • trading practices with a focus on door-to-door and telemarketing
  • scam practices with a focus on improving consumer awareness of scams
  • consumer-directed care focusing on the NDIS and increasing consumers’ awareness of their rights
  • motor vehicle sales focusing on consumer and dealer rights and obligations.

In September 2017 Hope Vale became the third Indigenous community to become ‘Do Not Knock informed’ (DNKi). The DNKi project represents a partnership between Indigenous communities, the ACCC and the relevant state/territory fair trading agency. In this case, the ACCC has partnered with the Hope Vale Aboriginal Shire Council, Cape York Partnership and Queensland Office of Fair Trading.

DNKi is about working with Indigenous communities to bring about consumer empowerment and choice.

The project does not seek to ban door-to-door trade within Indigenous communities. Rather, it empowers Indigenous Australians with the consumer rights knowledge that is required to deal with this type of trade. Hope Vale consumers can choose to either negotiate with door-to-door traders or stop them from coming to their home by displaying a Do Not Knock sticker on their front door. DNKi also puts visiting traders on notice that they are expected to abide by the ACL and that consumers will enforce their consumer rights by reporting unlawful conduct.

On 3 November 2017 the ACCC made a submission to the House of Representatives Standing Committee on Indigenous Affairs. In the submission, the ACCC submitted that the ACL is an effective tool to promote authentic products and restricts the sale of inauthentic art, but only to the extent that it prohibits sellers representing (expressly or by implication) that art is authentic when it is not.

The ACCC continues to actively participate a government committee considering what other regulatory responses to the production and sale of inauthentic Indigenous art may be appropriate.

In addition to the litigated matters involving the VET FEE-HELP education and training courses and the protection of vulnerable and disadvantaged consumers (including some Indigenous Australians), the following case study highlights enforcement action in relation to this enduring priority.

Case study: Conduct affecting Indigenous Australians

In March 2018, the ACCC instituted proceedings against Aboriginal art products and Australiana souvenirs wholesaler Birubi Art Pty Ltd (Birubi), alleging it made misleading Indigenous art claims.

The ACCC alleges that, between July 2014 and November 2017, Birubi contravened the ACL by making false or misleading representations that some of its products were made in Australia and/or that Aboriginal people had made or hand painted them, when in fact they were made in Indonesia.

The products include Aboriginal cultural objects such as boomerangs, bullroarers and didgeridoos. The products displayed a combination of words and artwork including ‘hand painted’, ‘handcrafted’, ‘Aboriginal Art’ and ‘Australia’.

The ACCC is seeking declarations, pecuniary penalties, injunctions, corrective notices, compliance program orders and costs.

Court cases

The following case commenced in 2017–18.

Table 3.22: Conduct affecting Indigenous Australians proceedings commenced

Birubi Art Pty Ltd

Conduct

commenced

jurisdiction

21 March 2018

Federal Court Sydney

The ACCC instituted proceedings against Aboriginal art products and Australiana souvenirs wholesaler Birubi, alleging it made misleading Indigenous art claims.

For details see the case study above.

Consumer guarantees

Under the ACL, all products and services that consumers buy come with automatic guarantees that they will work and do what the consumer expects them to do. If the consumer buys a product that does not perform as expected, they have consumer rights.

Consumer guarantees ensure that consumers are not disadvantaged if they unknowingly buy defective products. It is important that consumers are aware of their rights when purchasing goods and that businesses act in accordance with the ACL and do not try to mislead consumers about the extent of these rights.

If a business fails to deliver any of these guarantees, there are consumer rights for repair, replacement or refund; cancelling a service; or compensation for damages and loss. The ACCC has powers to enforce compliance with the ACL where businesses mislead consumers about their rights under consumer guarantees.

Questions and complaints about guarantees and warranties are one of the most common reasons why consumers contact us and other ACL regulators.

In 2017 under our Compliance and Enforcement Policy, the ACCC continued to focus on representations that large retailers make about express and extended warranties as well as consumer guarantee claims in relation to the airline industry. In 2018 the ACCC will continue to focus on systemic issues involving large or national traders that avoid or misrepresent consumer guarantee rights. In addition, in 2017–18 there has also been a particular focus on the protection of consumer guarantee rights within the new car retailing industry. See page 82 for further details on our work on new car retailing consumer guarantees.

Case study: Consumer guarantee issues in the electronics industry—MSY Technology

In October 2017 the Federal Court ordered penalties totalling $750 000 against MSY Technology Pty Ltd, MSY Group Pty Ltd and MSY Technology (NSW) Pty Ltd (MSY Technology) for misrepresenting consumers’ rights to remedies for faulty products.

MSY Technology operates 28 retail stores across Australia and online, selling computers, computer parts, accessories and software. MSY Technology admitted that it made false or misleading representations on the MSY website, and in oral and email communications to consumers about their rights.

This is the second time the ACCC has taken action against MSY entities. In 2011 the Court imposed penalties for misleading consumer warranty representations.

The Federal Court also made other orders, including injunctions, a comprehensive ACL compliance training program, publication orders and payment of $50 000 towards the ACCC’s costs.

After the proceedings commenced, MSY Technology made admissions and agreed to joint submissions on liability and relief (including penalty), which were filed with the Court.

In December 2017 the ACCC also released a report highlighting common consumer issues in the airline industry. The report highlights the ACCC’s concerns in this area and informs consumers of their consumer guarantee rights when dealing with airlines.

Case study: Consumer issues in the airline industry

In 2017 the ACCC examined issues that have arisen in the Australian airline industry relating to consumer guarantee rights and contract terms which may be unfair.

Consumer guarantees relating to services provided in industries such as the airline industry are a current priority for the ACCC. Airlines must ensure they comply with the ACL, avoid unfair contract terms and make sure their terms and conditions are consistent with consumer guarantees.

Between 1 January 2016 and 14 December 2017, the ACCC received over 1400 consumer complaints about airlines. These included hundreds of complaints relating to consumer guarantees and excessive fees.

The ACCC has reviewed complaint data from its own records, state fair trading agencies and consumer group CHOICE about the largest Australian-based airlines (the Airlines) and has identified the following issues:

  • ‘no refund’ statements on the Airlines’ websites
  • excessive fees for flight cancellations and changes
  • the application of consumer guarantees, including statements made about a customer’s consumer guarantee rights under the ACL, in circumstances where flights have been cancelled or delayed.

In December 2017 the ACCC released its report, entitled Airlines: Terms and conditions. The report highlights common consumer issues in the industry and the ACCC’s concerns. It also informs consumers of their ACL rights when dealing with airlines. Where consumer issues continue, the ACCC is taking action to address concerns. In 2018 the ACCC is engaging with the Airlines to discuss its expectations for change.

Court cases

The following cases commenced in 2017–18.

Table 3.23: Consumer guarantees proceedings commenced

Jayco Corporation Pty Ltd

Conduct

commenced

jurisdiction

29 November 2017

Federal Court Melbourne

The ACCC alleges that Jayco acted unconscionably and made false or misleading representations to four customers by obstructing them from obtaining redress for their defective caravans.

The following cases were ongoing at the end of 2017–18.

Table 3.24: Consumer guarantees proceedings ongoing

LG Electronics Australia Pty Ltd (appeal)

Conduct

Commenced

jurisdiction

status

15 December 2015

Federal Court Melbourne

On 1 September 2017, the Federal Court dismissed the ACCC’s proceedings. The ACCC appealed this decision to the Full Federal Court.

On 27 June 2018 the Full Court upheld the ACCC’s appeal in part. The Full Court found that LG made two representations to consumers that were false, overturning the initial court decision, but dismissed the ACCC’s appeal in respect of other LG statements made to consumers.

The relief hearing will take place on a date to be fixed.

The ACCC alleges that LG made false or misleading representations to consumers about their rights in relation to faulty LG products.

The following cases were finalised in 2017–18.

Table 3.25: Consumer guarantees proceedings finalised

Apple Pty Ltd and Apple Inc.

Conduct

commenced

concluded

jurisdiction

outcome

6 April 2017

18 June 2018

Federal Court Melbourne

The Federal Court ordered $9 million in penalties against Apple Inc.

Apple Australia has also offered a court enforceable undertaking to improve staff training, audit information about warranties and the ACL on its website, and improve its systems and procedures to ensure future compliance with the ACL.

The ACCC alleged that Apple and Apple Inc. made false, misleading or deceptive representations to consumers in-store, online and during telephone calls about consumers’ rights in respect of defective Apple devices if those devices had been repaired by a third party.

MSY Technology Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

1 December 2016

25 October 2017

Federal Court Sydney

The Federal Court ordered penalties totaling $750 000 against MSY Technology.

The Court also made other orders including injunctions, a comprehensive ACL compliance training program, publication orders and payment of $50 000 towards the ACCC’s costs.

The ACCC alleged that MSY, MSY Group Pty Ltd and MSY Technology (NSW) Pty Ltd misrepresented consumers’ rights to remedies for faulty products in contravention of the ACL.

For details see the case study "Consumer guarantee issues in the electronics industry—MSY Technology".

Valve Corporation Pty Ltd (appeal)

Conduct

commenced

concluded

jurisdiction

outcome

10 December 2015

20 April 2018

Federal Court Sydney

The Federal Court ordered a pecuniary penalty of $3 million.

The Court also made other orders:

  • injunction for three years
  • Valve must publish a consumer rights notice
  • Valve must establish a consumer law compliance program under the ACL for each Valve employee and maintain it for three years
  • Valve must pay ACCC costs as ordered.

Valve filed an appeal against the findings of the Court, penalties and other orders. The ACCC filed a cross-appeal in relation to two findings.

In December 2017 the Full Federal Court dismissed Valve’s appeal. Valve’s appeal against the $3 million penalty was also dismissed.

Valve then applied for special leave to the High Court to appeal the Full Federal Court’s decision. In April 2018 the High Court dismissed Valve’s special leave application.

The ACCC alleged that Valve made false or misleading representations to consumers about their rights in relation to refunds concerning computer games sold by Valve through the online platform known as Steam.

Undertakings

The following s. 87B undertakings were finalised in 2017–18. Details of the s. 87B undertakings are available in full on the undertakings public register on the ACCC website.

Table 3.26: Consumer guarantees undertakings finalised

Fitbit Australia Ltd

s. 87B undertaking dated 1 June 2018

The ACCC accepted a court enforceable undertaking from Fitbit to amend information they provide to customers about their consumer guarantee rights under the ACL.

NETGEAR Australia Pty Ltd

s. 87B undertaking dated 26 February 2018

The ACCC accepted a court enforceable undertaking from Netgear to provide remedies and refunds to customers who were misled by representations that they could not receive a remedy for a faulty product unless they were covered by the manufacturer’s warranty or they purchased a technical support contract.

Belkin Ltd

s. 87B undertaking dated 18 December 2017

The ACCC accepted a court enforceable undertaking from consumer electronics manufacturer Belkin to honour claims under its lifetime warranty policies for the lifetime of the original purchaser.

BXT International Ltd

s. 87B undertaking dated 12 December 2017

The ACCC accepted a court enforceable undertaking from BXT. BXT admitted to contravening the ACL by advertising electronic goods such as mobile phones and tablets as ‘new’, when they were in fact refurbished. BXT also admitted to misleading consumers about their rights by falsely claiming they were not bound by the ACL, as they were incorporated overseas. As part of its undertaking, BXT has agreed to contact and offer redress to certain consumers who were either misled into purchasing refurbished products or were misled as to their rights under the ACL.

TCF Global Ltd

s. 87B undertaking dated 12 December 2017

The ACCC accepted a court enforceable undertaking from TCF. TCF (which operates Techrific and CatchDeal) admitted to contravening the ACL by advertising electronic goods such as mobile phones and tablets as ‘new’ when they were in fact refurbished. As part of its undertaking, TCF has agreed to contact and offer redress to certain consumers who were either misled into purchasing refurbished products or were misled as to their rights under the ACL.

Infringement notices

The following infringement notices were paid in 2017–18.

Table 3.27: Consumer guarantees infringement notices paid

Lululemon Athletica Australia Pty Ltd

18 July 2017

Three notices totalling $32 400

The ACCC issued three infringement notices because it had reasonable grounds to believe that Lululemon had made false or misleading representations about consumer guarantee rights.

Administrative resolutions

The following administrative resolutions were finalised in 2017–18.

Table 3.28: Administrative resolutions for consumer guarantee issues

Davantage Group Pty Ltd

28 September 2017

Davantage Group trading as National Warranty Company agreed to make changes to its ‘Extension to Manufacturer’s Warranty’, which is primarily sold through used vehicle dealerships, following concerns raised by the ACCC.

New car retailing

Consumer issues in new car retailing is a priority area in both the 2017 and 2018 ACCC Compliance and Enforcement Policy. This also includes car retailers’ and manufacturers’ responses to consumer guarantee claims. More recently the ACCC’s focus in new car retailing has been on misleading or deceptive conduct and false and misleading representations made by car manufacturers about vehicle emission claims.

On 14 December 2017 the ACCC released its final report on the new car retailing industry: New car retailing industry: A market study by the ACCC. The report detailed its findings of nearly 18 months of investigation, consultation and research. It identified a number of problems that are harming consumers and hindering effective competition in the industry. The report also raises important issues such as the handling of consumer guarantee complaints, independent repairer access to technical information, and fuel consumption and emissions information.

The ACCC is working with other ACL regulators and the industry to publish guidance for consumers on their rights if there is a problem with their new car. This will include guidance that dealers are to distribute to consumers at the point of sale.

Case study: New car retailing—Ford Motor Company of Australia Ltd

In April 2018 the Federal Court declared that Ford Motor Company of Australia Ltd (Ford) engaged in unconscionable conduct in the way it dealt with complaints about PowerShift transmission (PST) cars. The Court ordered Ford to pay $10 million in penalties.

Consumers who purchased Ford vehicles with PST made complaints to Ford and its dealers about their car’s excessive clutch shudder, excessive noisiness from the transmission, delayed acceleration and excessive shuddering and jerking when accelerating. Thirty-seven per cent of these vehicles had at least one clutch replacement.

In most cases, Ford only provided replacement vehicles in accordance with its ‘PowerShift Ownership Loyalty Program’, which required consumers to make a significant payment towards a replacement vehicle.

Ford communicated with its dealers about the quality issues on multiple occasions but did not give adequate information about the quality issues to the customers who complained to Ford about their vehicles.

The Federal Court held that Ford’s conduct in responding to consumer complaints about Fiesta, Focus and EcoSport vehicles fitted with PST between 1 May 2015 and 29 February 2016 was unconscionable. The Court-imposed penalty of $10 million is one of the largest handed down under the ACL and reflects the seriousness of Ford’s conduct.

The ACCC has also accepted a court enforceable undertaking from Ford to establish a program to review customer requests for refunds or replacement vehicles made between 1 May 2015 and 1 November 2016. At least 2000 affected consumers can apply for an independent arbiter to assess their complaints.

Ford has also undertaken to provide customers with access to more information about their cars, including the history of manufacturing defect repairs performed on their vehicles.

Court cases

The following cases were ongoing in 2017–18.

Table 3.29: New car retailing proceedings ongoing

Audi Aktiengesellschaft, Audi Australia Pty Ltd and Volkswagen Aktiengesellschaft

Conduct

commenced

jurisdiction

7 March 2017

Federal Court Sydney

The ACCC alleges that Audi Aktiengesellschaft (Audi AG) and its Australian subsidiary Audi Australia Pty Ltd (Audi Australia) engaged in misleading or deceptive conduct, made false or misleading representations and engaged in conduct liable to mislead the public in relation to certain diesel vehicle emission claims; and that their owner, German company Volkswagen Aktiengesellschaft, was knowingly concerned in this conduct.

Volkswagen Aktiengesellschaft and Volkswagen Group Australia Pty Ltd

Conduct

commenced

jurisdiction

31 August 2016

Federal Court Sydney

The ACCC alleges that Volkswagen engaged in misleading or deceptive conduct, false or misleading representations and conduct liable to mislead the public in relation to diesel vehicle emission claims.

The following cases were finalised in 2017–18.

Table 3.30: New car retailing proceedings finalised

Ford Motor Company of Australia Ltd

Conduct

commenced

concluded

jurisdiction

outcome

26 July 2017

26 April 2018

Federal Court Melbourne

Penalties of $10 million

Also see the court enforceable undertaking detailed below.

The ACCC alleged that Ford engaged in unconscionable and misleading or deceptive conduct, and made false or misleading representations in response to customer complaints about Powershift transmission vehicles.

For details see the case study "New car retailing—Ford Motor Company of Australia Ltd".

Undertakings

The following s. 87B undertakings were finalised in 2017–18. Details of the s. 87B undertakings are available in full on the undertakings public register on the ACCC website.

Table 3.31: Car retailing undertakings finalised

Ford Motor Company of Australia Ltd

s. 87B undertaking dated 26 April 2018

As part of a litigated outcome, the ACCC accepted a court enforceable undertaking from Ford to establish a program to review customer requests for refunds or replacement vehicles made between 1 May 2015 and 1 November 2016. Ford also agreed to provide customers with more information about their cars, including the history of manufacturing defect repairs performed.

For more details see the case study "New car retailing—Ford Motor Company of Australia Ltd".

Hyundai Motor Company Australia Pty Ltd

s. 87B undertaking dated 6 February 2018

The ACCC accepted a court enforceable undertaking from Hyundai to improve its compliance with consumer guarantee obligations under the ACL.

GM Holden Ltd

s. 87B undertaking dated 2 August 2017

The ACCC accepted a court enforceable undertaking from Holden to comply with its consumer guarantee obligations under the ACL and adopt recommendations from the recent ACL review.

Excessive payment surcharges ban

In 2017–18 the ACCC continued priority work to enforce the ban on excessive payment surcharges on debit and credit cards. The ban applied to large businesses in Australian from 1 September 2016 and to all other Australian businesses from 1 September 2017.

Case study: Action to enforce new excessive payment surcharge laws

In November 2017 Red Balloon Pty Ltd (Red Balloon) paid penalties totalling $43 200 following the issue of four infringement notices by the ACCC for alleged breaches of the new excessive payment surcharges laws in the CCA.

Red Balloon is an online trader that sells ‘experiences’ in Australia, such as skydiving jumps, wine tours, and cooking classes.

The ACCC alleged that on 31 March and 30 June 2017 Red Balloon charged four consumers excessive payment surcharges on payments they made by Mastercard credit, Visa credit, Visa debit and MasterCard debit respectively.

Red Balloon is classified as a large business under the excessive payment surcharges provisions. The ban on excessive surcharges has applied to large businesses in Australia for more than a year, commencing on 1 September 2016. For all other Australian businesses, the new ban has applied since 1 September this year.

Red Balloon has since lowered its payment surcharges to the correct amounts, and cooperated with the ACCC’s investigation.

Infringement notices

The following infringement notices were paid in 2017–18.

Table 3.32: Surcharging infringement notices paid

Red Balloon Pty Ltd

17 November 2017

Four infringement notices totalling $43 200

The ACCC issued four infringement notices against Red Balloon for alleged breaches of the new excessive payment surcharge laws in the CCA. The ACCC alleged that on 31 March and 30 June 2017 Red Balloon charged four consumers excessive payment surcharges on payments they made by various credit and debit cards.

For details see the case study above.

Telecommunications sector (including broadband) and energy sectors

In 2017–18 the ACCC continued to prioritise misleading and deceptive conduct and false or misleading representations in the telecommunications and energy sectors. In particular, the ACCC has recently taken enforcement action in relation to unconscionable conduct and false or misleading representations made to consumers in the provision of broadband services. As part of this, it has been addressing misleading speed claims and statements made during the transition to the NBN.

Case study: False or misleading representations in the telecommunications sector

In April 2018 following action by the ACCC, the Federal Court ordered Telstra to pay penalties of $10 million for making false or misleading representations to customers in relation to its third-party billing service known as ‘Premium Direct Billing’ (PDB).

In 2015 and 2016, Telstra operated the PDB service on mobile phone accounts. It did not adequately inform customers that it had set the PDB service as a default on these accounts. Under the PDB service, if customers accessed content through this service—for example, games and ringtones—even unintentionally, they were billed directly by Telstra.

The Federal Court held that Telstra misled customers and breached the Australian Securities and Investments Commission Act 2001 when it charged them for digital content under the PDB, which they unknowingly purchased. Telstra admitted that more than 100 000 customers may have been affected and has committed to offer refunds to these customers.

As part of this resolution, Telstra has ceased operating the PDB service entirely.

Telstra estimates it has provided refunds of at least $5 million, and it will review any future complaints in light of this action and deal with those customers in good faith. The ACCC estimates further refunds may be in the order of several million dollars.

Case study: False or misleading representations made during the transition to the NBN

In May 2018 the Federal Court ordered Optus Internet Pty Ltd (Optus) to pay penalties of $1.5 million for making misleading representations to customers about their transition from Optus’ HFC network to the NBN.

From October 2015 to March 2017, Optus told around 14 000 of its customers that their services would be disconnected (in as little as 30 days in some cases) if they did not move to the NBN. Under the terms of its contract, Optus could not force disconnection within the timeframe it claimed.

Optus also made misleading representations to customers that they had to sign up to Optus’ NBN services when they could have chosen any internet service provider.

Optus benefited by around $750 000 as a result of the conduct.

Since the ACCC investigation commenced, Optus has paid $833 000 in compensation to affected customers for the disconnection of their services.

Court cases

The following cases were finalised in 2017–18.

Table 3.33: False or misleading representations in telecommunications proceedings finalised

Telstra Corporation Ltd

Conduct

commenced

concluded

jurisdiction

outcome

26 March 2018

26 April 2018

Federal Court Melbourne

The Federal Court ordered penalties against Telstra of $10 million for making false or misleading representations.

Telstra admitted that more than 100 000 customers may have been affected and has committed to offer refunds to these customers. Telstra estimates it has already provided refunds of at least $5 million.

The ACCC commenced proceedings against Telstra, under a delegation of power from ASIC, alleging that it made false or misleading representations to consumers in relation to its third-party billing service known as ‘Premium Direct Billing’.

For details see the case study "False or misleading representations in the telecommunications sector".

Optus Internet Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

15 December 2017

23 May 2018

Federal Court Melbourne

The Federal Court ordered a penalty of $1.5 million.

The ACCC alleges that between October 2015 and March 2017 Optus made false or misleading representations by writing to its customers to advise it would disconnect their HFC service within a specified time period, as the NBN was coming to their area. However, Optus was not contractually allowed to cancel the customers’ services in the timeframes it gave to customers.

For details see the case study "False or misleading representations made during the transition to the NBN".

Undertakings

The following s. 87B undertakings were finalised in 2017–18. Details of the s. 87B undertakings are available in full on the undertakings public register on the ACCC website.

Table 3.34: Broadband services undertakings finalised

Dodo Services Pty Ltd

s. 87B undertaking dated 22 March 2018

The ACCC has accepted an undertaking from Dodo to offer remedies to more than 3000 customers who could not receive the internet speeds they bought because their NBN connection was incapable of delivering them.

M2 Commander Pty Ltd

s. 87B undertaking dated 22 March 2018

The ACCC has accepted an undertaking from M2 Commander to offer remedies to more than 500 customers who could not receive the internet speeds they bought because their NBN connection was incapable of delivering them.

Primus Telecommunications Pty Ltd

s. 87B undertaking dated 22 March 2018

The ACCC has accepted an undertaking from Primus to offer remedies to nearly 2000 customers who could not receive the internet speeds they bought because their NBN connection was incapable of delivering them.

iiNet Ltd

s. 87B undertaking dated 19 March 2018

The ACCC has accepted an undertaking from iiNet to compensate more than 8000 customers who could not reach the internet speeds promised in their NBN contracts. Following the ACCC’s investigation, iiNet admitted that, between 2015 and mid-2017, it was likely to have engaged in misleading or deceptive conduct or made false or misleading representations by promoting and offering NBN plans with maximum speeds it could not deliver.

Internode Pty Ltd

s. 87B undertaking dated 19 March 2018

The ACCC has accepted an undertaking from Internode to compensate more than 3000 customers who could not reach the internet speeds promised in their NBN contracts. Following the ACCC’s investigation, Internode admitted that, between 2015 and mid-2017, it was likely to have engaged in misleading or deceptive conduct or made false or misleading representations by promoting and offering NBN plans with maximum speeds that it could not deliver.

TPG Internet Pty Ltd

s. 87B undertaking dated 20 December 2017

Following ACCC investigation, TPG undertook to compensate nearly 8000 of its customers who were misled about the maximum speeds they could achieve on certain TPG NBN plans.

Optus Internet Pty Ltd

s. 87B undertaking dated 11 November 2017

Following ACCC investigation, Optus undertook to offer remedies to more than 8700 of its customers who were misled about maximum speeds they could achieve on certain Optus NBN plans.

Telstra Corporation Ltd

s. 87B undertaking dated 7 November 2017

Following ACCC investigation, Telstra undertook to offer remedies to around 42 000 customers for promoting and offering some of its NBN speed plans as being capable of delivering specified maximum speeds, when those maximum speeds could not be achieved in real-world conditions.

Infringement notices

The following infringement notice was paid in 2017–18.

Table 3.35: Telecommunications infringement notice paid

Australian Private Networks Pty Ltd t/a Activ8me

1 March 2018

One notice totalling $12 600

The ACCC issued the infringement notice because it had reasonable grounds to believe that Activ8me had made false or misleading representations that its internet services were endorsed or approved by the ACCC as being superior to those offered by other providers, when this was not the case. Activ8me has since removed the representations from its websites.

Administrative resolutions

The following administrative resolutions were finalised in 2017–18.

Table 3.36: Administrative resolutions for misleading electricity price representations

Alinta Energy

20 June 2018

Following an investigation by the ACCC, Alinta Energy has undertaken to compensate thousands of Victorians for making misleading electricity price comparisons which the ACCC considered were in breach of the ACL.

Health and medical, including private health insurance

Competition and consumer issues in the health and medical sector, including in relation to the private health industry, were an ACCC priority in 2017.

Our work in this area aims to increase awareness within the medical profession and the broader health industry about both rights and obligations under the law. We use market research and analysis to identify risks to consumers and the competitive process that may require intervention. These reviews also help us to identify industry good practice and encourage it more broadly within the sector. By publicising this work, we help to inform consumers, encourage public debate over competition and consumer matters and inform policy consideration.

In 2017–18 we began work on our 19th annual Report to the Australian Senate on anti-competitive and other practices by health insurers and providers in relation to private health insurance for the 2016–17 financial year. This year’s report analyses key competition and consumer developments and trends in the private health insurance industry. It also notes the Government’s major reforms to private health insurance announced in October 2017. The report was published in June 2018.

In 2018 work in this area continued, particularly in relation to representations made by health funds regarding their health insurance products.

Case study: Medical and health—Australian Unity Health Ltd

In November 2017 following an ACCC investigation, Australian Unity agreed to pay compensation to members who held couple and family policies in 2015 who were likely to have been misled about the dental benefits they could claim from their policy. It is expected that Australian Unity will pay at least $620 000 in compensation to affected consumers.

At the start of 2015, Australian Unity’s Comprehensive Extras policy for couples and families included one overall limit for dental benefits, which was between $1600 and $2400 per calendar year. The insurer’s factsheets, website and terms and conditions in 2015 represented to members that these benefits were fixed and would not change for that year.

However, in September 2015 Australian Unity made a change to its benefits. Before September 2015, members had been able to choose how to split the annual limit among individual family members. For example, families could use all of the annual limit for braces for one child. In September 2015 Australian Unity changed the way the annual limit worked. The total limit for dental benefits was the same. However, Australian Unity limited claims for each individual family member to half of the total annual limit. For example, previously an individual family member could have made a claim for dental work up to the entire $1600 annual limit. After September 2015 that family member now had an $800 limit.

Australian Unity wrote to members notifying them of the change in August 2015.

Australian Unity has provided a court enforceable undertaking to the ACCC under which it has agreed, for a period of three years, that:

  • during any 12-month period it will not make a detrimental change to any benefits that are represented as benefits provided for that 12-month period
  • it will improve the information it provides to consumers about Australian Unity’s ability to change benefits, including disclosing that Australian Unity is bound by the ACL when making changes
  • it will provide compensation, expected to be at least $620 000, to affected members, including reimbursement for out-of-pocket costs for dental services incurred in 2015 and payment of expenses on ongoing dental plans
  • it will notify members about its conduct and Australian Unity’s commitments contained in the undertaking.
Court cases

The following cases commenced in 2017–18.

Table 3.37: Health and medical proceedings commenced

GlaxoSmithKline Healthcare Australia Pty Ltd and Novartis Consumer Health Australasia Pty Ltd

commenced

jurisdiction

5 December 2017

Federal Court Sydney

The ACCC alleges that GSK and Novartis made false or misleading representations in the marketing of Voltaren Osteo Gel and Voltaren Emulgel pain relief products.

The ACCC alleges that GSK and Novartis represented that Osteo Gel was specifically formulated for treating osteoarthritis conditions and was more effective than Emulgel to treat those conditions, when the two products are identically formulated.

Ashley & Martin Pty Ltd

commenced

jurisdiction

29 November 2017

Federal Court Perth

The ACCC alleges that, from November 2013 until at least July 2017, Ashley & Martin used three different standard form contracts, all containing clauses that were unfair. The contracts were used for customers signing up to Ashley & Martin’s ‘Personal RealGROWTH Program’.

The following cases were ongoing at the end of 2017–18.

Table 3.38: Health and medical cases ongoing

Medibank Private Ltd (appeal)

commenced

jurisdiction

15 June 2016

Federal Court Melbourne

On 30 August 2017, the Federal Court dismissed the ACCC’s proceedings. On 21 September 2017, the ACCC appealed this decision to the Full Federal Court.

The ACCC alleges that Medibank engaged in misleading and unconscionable conduct when it failed to notify Medibank members and members of its subsidiary brand, ahm, of its decision to limit benefits paid to members for in-hospital pathology and radiology services.

Undertakings

The following s. 87B undertakings were finalised in 2017–18. Details of the s. 87B undertakings are available in full on the undertakings public register on the ACCC website.

Table 3.39: Health and medical undertakings finalised

Australian Unity Health Ltd

s. 87B undertaking dated 2 November 2017

The ACCC has accepted an undertaking from Australian Unity to pay compensation to members who held couple and family policies in 2015 who were likely to have been misled about the dental benefits they could claim from their policy. It is expected that Australian Unity will pay at least $620 000 in compensation to affected customers.

For details see the case study "Medical and health—Australian Unity Health Ltd".

Advanced Hair Studio Pty Ltd

s. 87B undertaking dated 10 October 2017

The ACCC has accepted an undertaking from Advanced Hair Studio to partly refund some customers who purchased the Advanced Laser Therapy Program between April 2015 and June 2017, following ACCC concerns that Advanced Hair’s contract contained terms that were unfair. Advanced Hair also undertook to establish an ACL Compliance Program.

Scams

ACCC’s work on scams

A scam is a fraudulent business or scheme which takes money or other goods from an unsuspecting person. Scams can have a significant financial impact on individuals and businesses. They target people of all backgrounds, ages and income levels. Every year scams cost Australians millions of dollars and cause considerable non-financial harm.

The ACCC plays an important role in educating Australians about how to protect themselves from scams. This remained a priority issue for the ACCC in 2017–18. The ACCC works on several fronts to prevent and minimise the harm that scams cause, including through ongoing education, communication and media stories, and disruption work and enforcement action where possible.

Targeting scams report

In May 2018 we released the ninth annual Targeting scams: Report of the ACCC on scam activity 2017. The report examines key trends in scam activity and highlights the impact of scams on the community. It also emphasises the cooperative work of the ACCC, other regulators and law enforcement agencies to disrupt scams and educate consumers.

In 2017 we received 161 528 scam-related contacts from consumers and small businesses, with reported financial losses totalling $90 928 622. We also reviewed data from other jurisdictions that receive reports or detect scams to gain a clearer picture of the significance of losses caused by scam activity in Australia, including the Australian Cybercrime Online Reporting Network (ACORN)1, the Australian Taxation Office and state and territory offices of fair trading. Combined losses reported to the ACCC and these other agencies exceeded $340 million.

Scams Awareness Network

The ACCC is the chair of the Scams Awareness Network (formerly the Australasian Consumer Fraud Taskforce). The network is made up of about 40 government regulatory agencies and departments in Australia and New Zealand that work alongside private sector, community and non-government partners to prevent scams. By coordinating our response we can deliver an effective approach to minimising consumer harm.

The ACCC is active in recruiting new members into the Scams Awareness Network to improve our ability to reach more Australian consumers and businesses with scam education and awareness raising activities.

Scams Awareness Week

The Scams Awareness Network runs an annual campaign, National Scams Awareness Week, to raise awareness of scam activity within our community. In 2018 the focus of the campaign was on threat-based impersonation scams.

Using the theme ‘Stop and check: is this for real?’ the campaign encouraged those being threatened by someone claiming to represent a government agency or trusted business to consider the possibility that it may be a scam. In 2017 the ACCC received reports of $4.7 million lost to threat-based impersonation scams. Additional reports to other agencies brought the combined total to $7 million.

As in previous years, Scams Awareness Week was supported by the Scam Awareness Network partner agencies and a range of private organisations to extend the reach of the messaging. This year our campaign partners included major banks, telecommunications providers, IT industry giants, online payment platforms, industry associations and community organisations. These member agencies and campaign partners promoted the campaign by posting social media content, publicising online content, issuing media releases and issuing scam warnings on their mobile apps.

In addition to this, our Deputy Chair, Delia Rickard, engaged heavily with the media during Scams Awareness Week. We promoted the message via print, online, television and radio media to an Australian audience of millions. Additional media releases during the week also highlighted scams targeting businesses and Indigenous Australians.

Scamwatch

The ACCC uses a range of media and communications channels to raise community awareness about scams. In 2017 our Scamwatch website, which hosts a wealth of information on how to identify and avoid scams, received over 2.4 million page views.

To ensure Australia’s linguistically diverse population has greater access to information on how to recognise, avoid and report scams, in 2017 the ACCC made scams information available on the Scamwatch website in 12 languages other than English.

The ACCC’s most popular publication, the Little black book of scams, was downloaded 13 348 times in 2017, with 162 095 hard copies distributed across Australia to financial institutions, police stations and community organisations.

Also in 2017 we distributed 14 Scamwatch radar email alerts on emerging scams to our subscribers. The number of subscribers to the email alerts increased by 24 per cent to 59 957. A notable email alert and media release in January 2018 informed consumers about the availability of potential refunds for scam victims from Western Union as a result of action taken by the US Fair Trade Commission.

We use our Scamwatch Twitter profile (@Scamwatch_gov) to provide information to Australian consumers and businesses about scams that are targeting them. In 2017 we posted 306 tweets and retweets to our followers. In 2017 the number of followers increased by 20 per cent to over 17 400.

Scam Intermediaries Pilot Project

Since September 2016, as part of a pilot program, the ACCC has engaged with 10 companies (intermediaries) in an effort to improve their approach to scam prevention. The objectives of the pilot project were to influence and enable these companies to improve their scam prevention practices to both reduce the incidence of scams and reduce the harm experienced by people using or transacting through their business or platform.

During 2017–18 the ACCC in conjunction with industry created a Good Practices Guide for Financial Intermediaries. The guide is an industry-facing document that provides guidance to financial service providers on how to raise internal awareness of scams, raise customer awareness of scams, gather scams intelligence and intervene in scams. The pilot project also established the direct provision of Scamwatch reports to intermediaries where consumers provided consent for the ACCC to do so. The ACCC worked with intermediaries during the period to clarify the expectation that they act on this information, for example where they identify a scam and action can be taken or where intelligence can be used to optimise scam prevention efforts. The ACCC expects all intermediaries and platform operators will take steps to identify scams on their platforms and take action accordingly to protect consumers. The ACCC received positive feedback from the pilot, and the scam intermediaries work will continue in 2018–19.

Court cases

The following case commenced in 2017–18.

Table 3.40: Scam disruption proceedings commenced

Domain Name Corp Pty Ltd and Domain Name Agency Pty Ltd

Conduct

commenced

4 August 2017

Federal Court Western Australia

The ACCC alleges that the Domain companies engaged in misleading or deceptive conduct and made false or misleading representations to Australian businesses about the domain name services they offered.

The ACCC also alleges that the sole director of both the Domain companies was involved in the conduct.

The following case was ongoing at the end of 2017–18.

Table 3.41: Scam disruption proceedings ongoing

We Buy Houses Pty Ltd

Conduct

commenced

jurisdiction

status

2 March 2015
Federal Court Sydney

On 11 August 2017 the Federal Court found that We Buy Houses and Rick Otton made false or misleading representations in promoting a number of wealth creation strategies involving real estate.

The relief hearing will take place on a date to be fixed.

The ACCC alleges that We Buy Houses and its sole director, Rick Otton, made false or misleading representations in promoting a number of wealth creation strategies involving real estate.

The following case was finalised at the end of 2017–18.

Table 3.42: Scam disruption proceedings finalised

ABG Pages Pty Ltd

Conduct

commenced

concluded
jurisdiction

outcome

15 December 2016

20 March 2018

Federal Court Brisbane

The Federal Court ordered:

  • penalties of $30 000 against ABG for engaging in systemic unconscionable conduct, undue harassment, and making false and misleading representations in relation to its online advertising services
  • that ABG’s sole director, Michele McCullough, pay a $40 000 penalty and be disqualified from managing corporations for five years for her role in the conduct.

ABG and Ms McCullough admitted to breaching the ACL and were also ordered to jointly make a contribution of $25 000 towards the ACCC’s costs. Ms McCullough is to attend an ACL compliance program.

The ACCC alleged that ABG Pages engaged in misleading or deceptive conduct, false or misleading representations, undue harassment and systemic unconscionable conduct in its dealings with small businesses that were actual or potential customers of its online business directory service.

Domain Name Corp Pty Ltd and Domain Name Agency Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

4 August 2017

14 June 2018

Federal Court Western Australia

The Federal Court ordered that the Domain companies pay combined penalties of $1.95 million.

The Court also made other orders, including injunctions for three years against each of the Domain companies and for five years against Steven Bell, the sole director of both Domain companies.

The Court also made an order disqualifying Mr Bell from managing a corporation for five years and ordered him to pay $8000 in costs to the ACCC.

The ACCC alleged that the Domain companies engaged in misleading or deceptive conduct and made false or misleading representations to Australian businesses about the domain name services they offered.

The ACCC also alleged that the sole director of both the Domain companies was involved in the conduct.

Product safety

Consumers should have a right to expect the products they buy work properly and do not present an unreasonable risk to safety. Under the ACL consumer goods are expected to meet the consumer guarantee of acceptable quality, including being safe. While not all product safety incidents are likely to be reported to regulators, this year the ACCC received 4123 product safety incident reports, which included 3255 mandatory injury reports.

When consumers find the goods they have purchased are not as safe as expected, consumers can pursue their consumer guarantee rights. Consumers can assert these guarantee rights regardless of any other action taken by businesses to remedy unsafe goods.

Under the ACL consumer protections also exist to safeguard against suppliers engaging in conduct that is likely to be misleading or deceptive, which include representations as to the safety of a product. The ACL also provides for injury reporting, recalls, bans, safety standards and product liability.

There are 20 bans and 42 mandatory standards made under the ACL that apply to specific consumer goods. Selling goods that do not comply with these safety requirements is a serious matter and significant penalties may apply. However, there is currently no penalty for supplying unsafe goods not subject to a ban or standard, as there is no general prohibition against the supply of unsafe goods in Australia.

The ACCC has continued to work closely with Consumer Affairs Australia New Zealand (CAANZ) members to develop a public regulatory impact assessment on the benefits of introducing a GSP as recommended in the Australian Consumer Law review final report. A GSP would prohibit the supply of unsafe goods and introduce penalties against businesses that supply unsafe goods.

The ACCC strongly advocated throughout the year for the development and introduction of a GSP under the ACL, including via the ACCC Chair’s address at the National Consumer Congress 2018. Under the current provisions of the ACL, it is not illegal to supply unsafe products in Australia, as it is in a range of places like the UK, the European Union, Canada, Malaysia and Brazil. Faulty products continue to cause serious injury and harm to thousands of Australians, with more than 4.5 million items recalled by suppliers in 2017–18. The ACCC supports the development and implementation of a GSP under the ACL. A GSP would strengthen the product safety regime in Australia and allow the ACCC to respond to product safety hazards faster and support existing consumer remedies in the ACL.

The ACCC’s product safety enforcement work is discussed further on page 118.

Other consumer protection work

Truth in advertising

Truth in advertising was previously a priority area for the ACCC. Our focus was on ensuring that consumers were not misled and that honest traders were not put at a competitive disadvantage. The ACCC has ongoing cases in this priority area.

However, in both 2017 and 2018 we also prioritised matters where large companies engage in national conduct that could potentially result in greater consumer detriment from their actions and there is a likelihood that the conduct of larger businesses can influence the behaviour of other market participants.

Case study: Truth in advertising and misleading health food representations

In March 2018 the Federal Court found that food manufacturer HJ Heinz Company Australia Ltd (Heinz) made a misleading health claim that its Little Kids Shredz products were beneficial for young children.

In 2016 the ACCC instituted proceedings against Heinz, alleging that these images and statements on Shredz products represented to consumers that they were a healthy and nutritious food for young children when this was not the case.

In 2018 the Federal Court found that Heinz had made a misleading health claim—that its Little Kids Shredz products were beneficial to the health of children aged one to three years when this was not the case.

Further, the Court found that Heinz nutritionists ought to have known that, given the product was approximately two-thirds sugar, a representation that the product was beneficial to health of children was misleading.

The Court found that the combination of imagery and words on the packaging, including prominent pictures of wholesome fresh fruit and vegetables and statements such as ‘99% fruit and veg’, conjured up the impressions of nutritiousness and health.

A hearing on penalties and other orders sought by the ACCC will be held on a date to be fixed by the Court.

Case study: Truth in advertising and misleading environmental representations

In 2017–18 the ACCC has instituted cases against:

  • Pental and Kimberly-Clark Australia about claims its wipes are ‘flushable’
  • Woolworths about claims its disposable plates and cutlery are biodegradable and compostable.

In April 2018 the Federal Court ordered Pental Ltd and Pental Products Pty Ltd (together, Pental) to pay penalties totalling $700 000 for making false and misleading representations about its White King ‘flushable’ toilet and bathroom cleaning wipes.

Between February 2011 and July 2016 the packaging and promotional materials for the wipes included statements such as ‘flushable’ and ‘Simply wipe over the hard surface of the toilet … and just flush away’. They also stated that ‘White King Toilet Wipes are made from a specially designed material, which will disintegrate in the sewage system when flushed, just like toilet paper’.

Pental admitted that the representations it had made—that its White King ‘flushable’ wipes were made from a specially designed material which disintegrated in the sewerage system like toilet paper, had similar characteristics to toilet paper when flushed and were suitable to be flushed into the sewerage system—were false.

In April 2018 the Federal Court ordered Pental to pay penalties totalling $700 000. In addition, the Court made declarations that these representations were false or misleading in contravention of the ACL and ordered Pental to implement a compliance program.

The ACCC has separate ongoing proceedings against Kimberly-Clark Australia Pty Ltd concerning alleged false or misleading representations in relation to four ‘flushable’ personal hygiene wipes products that were marketed and supplied in Australia between May 2013 and May 2016.

Similarly, in March 2018 the ACCC instituted proceedings in the Federal Court against Woolworths Ltd (Woolworths) alleging that the environmental representations made about its ‘W Select eco’ picnic products were false, misleading or deceptive in contravention of the ACL.

From November 2014 to November 2017 Woolworths labelled disposable bowls, plates and cutlery in its ‘W Select eco’ line as ‘Biodegradable and Compostable’. The ACCC alleges Woolworths failed to make reasonable or adequate efforts to substantiate these biodegradability and compostability claims.

The ACCC is seeking pecuniary penalties, injunctions, declarations, publication orders and costs.

Court cases

The following case commenced in 2017–18.

Table 3.43: Truth in advertising claims proceedings commenced

Woolworths Ltd

Conduct

commenced

jurisdiction

2 March 2018

Federal Court Melbourne

The ACCC instituted proceedings in the Federal Court against Woolworths, alleging that the environmental representations made about its ‘W Select eco’ picnic products were false, misleading or deceptive in contravention of the ACL.

For details see the case study above.

The following cases were ongoing in 2017–18.

Table 3.44: Truth in advertising claims proceedings ongoing

Kimberly-Clark Australia Pty Ltd

Conduct

commenced

jurisdiction

12 December 2016

Federal Court Sydney

The ACCC alleges that Kimberly-Clark made false or misleading representations in relation to ‘flushable’ wipes it marketed and supplied in Australia.

For details see the case study on page 94.

HJ Heinz Company Australia Ltd

Conduct

commenced

jurisdiction

status

21 June 2016

Federal Court Adelaide

On 19 March 2018, the Federal Court found that Heinz made a misleading health claim by representing that its Shredz products were beneficial to the health of children aged one to three years, when this was not the case.

A hearing on penalties will be held on a date to be fixed by the Court.

The ACCC alleges that Heinz used particular statements and images on certain products that represented to consumers that those products are of equivalent nutritional value to fruit and vegetables and are a healthy and nutritious food for children aged one to three years, when this is not the case.

The following cases were finalised in 2017–18.

Table 3.45: Truth in advertising claims proceedings finalised

Pental Ltd and Pental Products Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

12 December 2016

12 April 2018

Federal Court Sydney

The Federal Court ordered penalties of $700 000.

The ACCC alleged that Pental made false or misleading representations in relation to ‘flushable’ wipes it marketed and supplied in Australia.

Snowdale Holdings Pty Ltd

Conduct

commenced

jurisdiction

concluded

outcome

9 December 2013

Federal Court Perth

25 July 2017

The Federal Court ordered penalties of $750 000.

It also ordered Snowdale to implement a consumer law compliance program and pay a contribution towards the ACCC’s costs.

The ACCC alleged that Snowdale in WA made false, misleading or deceptive representations by the images and wording on their egg cartons and website in that the eggs supplied and labelled as ‘free range’ were produced by hens that were not able to move about freely on an open range each day.

Undertakings

The following s. 87B court undertakings were finalised in 2017–18. Details of the s. 87B undertakings are available in full on the undertakings public register on the ACCC website.

Table 3.46: Truth in advertising claims undertakings finalised

HP PPS Australia

s. 87B undertaking dated
3 April 2018

The ACCC accepted a court enforceable undertaking from HP in relation to the failure to disclose to consumers that certain HP inkjet printers had been installed with technology intended to prevent those printers from working with non-HP ink cartridges.

Infringement notices

The following infringement notice was paid in 2017–18.

Table 3.47: Truth in advertising claims infringement notices paid

Jenny Craig Weight Loss Centres Pty Ltd

Three notices totalling $37 800

The ACCC issued three infringement notices because it had reasonable grounds to believe that Jenny Craig had made false or misleading representations in breach of the ACL. From December 2017 to February 2018, Jenny Craig represented in advertisements that people could lose up to 10 kilograms of weight for a $10 program fee, without adequately disclosing that customers also had to purchase food at an additional cost.

Administrative resolutions

The following administrative resolutions were finalised in 2017–18.

Table 3.48: Administrative resolutions for truth in advertising claims

CompassCorp Pty Ltd

1 December 2017

Following an investigation by the ACCC, CompassCorp trading as Compass Claims agreed to amend its advertising and sales practices to inform consumers of hire charges and their obligation to provide assistance.

Telstra

19 October 2017

Telstra offered refunds to some AFL Live Pass app subscribers after the ACCC raised concerns about Telstra’s disclosure of the size of its viewing screen available on mobiles and tablets.

Aldi Foods Pty Ltd

13 October 2017

The ACCC completed its investigation into Aldi’s ‘flushable’ wipes and will take no further action after Aldi stopped selling its personal hygiene wipes and removed potentially misleading claims from its bathroom cleaning wipes packaging.

Commission-based sales

We continue to analyse selected industries to improve our understanding of industry practices and dynamics. For example, in 2017 the ACCC focused on misleading behaviour that may be driven by sales commissions, particularly in industries that enjoy a high level of trust and where commissions may not be expected—for example, the charity sector.

Case study: Commission-based fundraising in the charity sector

In November 2017 as part of its 2017 compliance and enforcement focus on consumer issues arising from commission-based sales, the ACCC released an independent research report on commission-based fundraising in the charity sector. The report, by Frost & Sullivan, is based on interviews with three fundraising agencies, one industry association, 14 charities and 13 individuals who currently or have recently worked in commission-based fundraising.

The report found that some charities operated on a model in which third-party marketing firms earn fees for each donor that signs up from face-to-face or telemarketing approaches. The fee is commonly calculated by a multiple of the monthly donation to which the donor commits. This multiple is typically eight to 17 times the donor fee.

The report, Research into the commission-based charity fundraising industry in Australia, is available on our website.

Online consumer issues

Emerging systemic consumer issues in the online marketplace was an ACCC priority in 2017.

In 2018 the ACCC continued to prioritise online consumer protection with a focus on the use of digital platforms, algorithms and consumer data and the emerging markets and matters identified by the ACCC’s digital platforms inquiry. The ACCC also continued to prioritise better product safety outcomes for consumers in the online marketplace.

Under the ACL, Australian consumers are entitled to the same safety protections and outcomes when shopping online as they have when shopping with traditional ‘bricks and mortar’ retailers.

We have been actively monitoring and engaging with businesses about online supply to make sure that they continue to comply with the consumer protections in the ACL, regardless of their geographic location or business model.

We have focused on:

  • the safety of products purchased from online businesses
  • digital platforms
  • misleading and deceptive conduct relating to online reviews
  • false or misleading online representations.
Supply of unsafe products by online retailers

In 2018 an ACCC priority is to ensure better product safety outcomes for consumers in the online marketplace. For over two years the ACCC has been working with online platform providers to address compliance concerns with suppliers on their platforms.

We have established mechanisms so that unsafe and non-compliant products are removed from sale in the Australian marketplace. The online platforms we engaged with are also providing ACCC-developed resources to offshore suppliers and promoting the Product Safety website as a reliable source of information and guidance on Australia’s product safety laws.

The ACCC continues to work collaboratively with its international counterparts both bilaterally and through global and regional forums. Where relevant, the ACCC aligns its surveillance programs with global activities. The ACCC looks for opportunities to enter into memoranda of understanding and other reciprocal arrangements with its Organisation for Economic Co-operation and Development (OECD) partners to improve communication, information sharing and cooperation.

In 2017–18 the ACCC began preparation for a global campaign we are co-leading with the European Commission to raise awareness on the safety of products sold online. The campaign will run in November 2018 and will target consumers, platforms and businesses.

Digital platforms

On 4 December 2017 the then Treasurer, the Hon. Scott Morrison MP, directed the ACCC to conduct an inquiry into digital platforms. The inquiry is looking at the effect that digital search engines, social media platforms and other digital content aggregation platforms have on competition in media and advertising services markets. In particular, the inquiry is looking at the impact of digital platforms on the supply of news and journalistic content and the implications of this for media content creators, advertisers and consumers.

An issues paper for the inquiry was released on 26 February 2018. Submissions were due on 3 April 2018. Public versions of submissions received by the ACCC can be accessed online.

The preliminary report is to be submitted to the Treasurer by 3 December 2018, with a final report due by 3 June 2019.

Misleading or deceptive conduct relating to online reviews

Recently the ACCC has continued to progress action involving larger companies engaging in misleading or deceptive conduct in relation to reviews of their business on review websites which gives them a potential competitive edge in the market and has the potential to result in consumer detriment.

Court cases

The following cases were ongoing in 2017–18.

Table 3.49: Misleading or deceptive online review proceedings ongoing

Meriton Property Services Pty Ltd

Conduct

Commenced

jurisdiction

status

24 November 2016

Federal Court Melbourne

On 20 November 2017 the Federal Court found that Meriton engaged in misleading or deceptive conduct in connection with the posting of reviews of its properties on the TripAdvisor website.

A hearing on relief against Meriton will be held on a date fixed by the Court.

The ACCC alleges that that Meriton engaged in misleading or deceptive conduct in connection with the posting of reviews of its properties on the TripAdvisor website. In particular, the ACCC alleges that, from November 2014 to October 2015, where Meriton suspected that guests would give negative reviews, it took steps to prevent them from receiving TripAdvisor’s Review Express email so that they could not post negative reviews.

The following cases were finalised in 2017–18.

Table 3.50: Misleading or deceptive online review proceedings finalised

Aveling Homes Pty Ltd

Conduct

commenced

concluded

jurisdiction

outcome

9 March 2017

30 November 2017

Federal Court Perth

The Federal Court ordered penalties totaling $380 000 against Aveling. Aveling undertook to the Court not to engage in similar conduct for a period of three years and agreed to contribute to the ACCC’s costs.

The company’s Group Sales and Marketing Manager, Mr Sean Quartermaine, was ordered to pay $25 000 for being knowingly concerned in the conduct.

The ACCC alleges that Aveling engaged in misleading conduct and false or misleading representations in relation to review websites Aveling created for its businesses, Aveling Homes and First Home Owner’s Centre.

Undertakings

The following s. 87B undertaking for misleading and deceptive online reviews was finalised in 2017–18. Details are available in full on the undertakings public register on the ACCC website.

Table 3.51: Misleading and deceptive online reviews undertakings finalised

Wisdom Properties Group Pty Ltd

s. 87B undertaking dated
5 June 2018

The ACCC has accepted an undertaking from home builder Wisdom to remove contract terms contained in its standard home building agreements which are unfair under the ACL. These unfair terms included non-disparagement clauses that allowed Wisdom to control or prevent any public statements, such as online reviews, that customers made about its services. Wisdom has admitted that these terms were unfair and will not enforce the clauses in existing agreements.

101 Residential Pty Ltd

s. 87B undertaking dated 15 December 2017

The ACCC has accepted an undertaking from 101 Residential not to enforce non-disparagement clauses in existing building contracts and will not use them in any future contracts. These non-disparagement clauses allowed 101 Residential to prohibit customers from publishing any unapproved information about the company, including online reviews.

False or misleading online representations

In both 2017 and 2018 the ACCC has also continued action involving larger companies making false or misleading representations online.

Court cases

The following case was commenced in 2017–18.

Table 3.52: False or misleading online representation proceedings commenced

Viagogo

Conduct

commenced

jurisdiction

28 August 2017

Federal Court Sydney

The ACCC alleges Viagogo made false or misleading representations, and engaged in misleading or deceptive conduct regarding the price of tickets on its online platform by failing to disclose substantial fees.

Infringement notices

The following infringement notice was paid in 2017–18.

Table 3.53: Infringement notices paid for false or misleading online representations

Hive Empire Pty Ltd

20 November 2017

One notice totalling $10 800

The ACCC issued an infringement notice because it had reasonable grounds to believe that Hive Empire, trading as finder.com.au, had breached the ACL by making false or misleading claims about the number of health insurance policies it compares.

Between February and May 2017 Finder represented on its website that its health insurance comparison service allowed consumers to ‘compare roughly 65 000 policies’ when the number of policies compared was substantially lower than this. Finder has removed the representation from its website.

Non-compliance with court orders

The ACCC will take action when it considers that court orders obtained for the protection of consumers have been breached. This action may include applying for orders to have a debtor declared bankrupt where they fail to pay costs previously ordered by the court.

Court cases

The following non-compliance cases were finalised in 2017–18.

Table 3.54: Non-compliance proceedings finalised

Jacov Vaisman (NRM Corporation Pty Ltd and NRM Trading Pty formerly known as Advanced Medical Institute Pty Ltd)

Conduct

commenced

concluded

jurisdiction

outcome

17 January 2018

31 January 2018

Federal Court Melbourne

The Court granted the ACCC’s application for a sequestration order and declared Mr Vaisman bankrupt effective from 4 December 2017.

In January 2018 the ACCC applied for a sequestration order against Jacov Vaisman after he failed to pay the ACCC’s costs in the Advanced Medical Institute (AMI) matter which amounted to over $3 million.

In 2015 the Federal Court found that AMI, its subsequent owner, NRM, and the former director of AMI and NRM, Jacov Vaisman, engaged in unconscionable conduct and used unfair contract terms in the way it promoted and supplied medical services and medications to vulnerable consumers suffering from sexual dysfunction.

Peter Foster (Sensaslim Australia Pty Ltd)

Conduct

commenced

concluded

jurisdiction

outcome

18 December 2017

29 January 2018

Federal Court Sydney

The Court granted the ACCC’s application for a sequestration order and declared Mr Foster bankrupt effective from 14 December 2017.

In January 2018 the ACCC applied for a sequestration order against Peter Foster after he failed to pay costs in the Sensaslim matter.

In 2014 the Federal Court found that Sensaslim had engaged in misleading or deceptive conduct and had made false or misleading representations by failing to disclose Mr Foster’s involvement in the Sensaslim franchise. The Court also found Mr Foster was knowingly concerned in the conduct.

In 2016 the Court ordered Mr Foster to pay both a $660 000 penalty and pay the ACCC’s costs, which he has not done.

 

[1] ACCC analysis of ACORN data specifically excludes reports that have been made to Scamwatch and those that do not identify whether they have reported elsewhere.

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