Advocacy for the consumer

Speakers: 
Mr Rod Sims, Chairman
Conference: 
National Consumer Congress
15 March 2017

In his address to the annual National Consumer Congress, ACCC Chairman Rod Sims highlights the importance of consumer advocacy, the challenges presented by new technology and digital disruption, and what's ahead for the ACCC. 

Transcript: 

 

Check against delivery

Consumer advocacy is essential to ensuring all consumers gain the benefits of a well-functioning market economy. While the ACCC plays a role in this through our enforcement and compliance activities, we cannot do this alone. And this is where you all come in. A big part of today is to acknowledge the importance of the work you all do.

When consumers experience unfairness, whether through unconscionable conduct, being misled or deceived, or finding themselves locked into a standard form contract containing terms that unfairly benefit the business, it’s all too easy for them to become angry and disengage from the process of defending their rights.

The contribution you all make to empowering consumers is considerable and essential to making sure that our market economy works as it should.

Indeed, since coming into this position 5 ½ years ago, I am continually puzzled as to why some large companies treat their customers so badly, and with so little respect.

We are often told that companies will only succeed by meeting customer needs. It is clear that some companies seek to deceive their consumers about these needs.

Companies also often enter public policy debates making only self-serving arguments. This is why it is vital that you and we are available to put a counter view.

Companies often then wonder why their standing in the community and their ability to influence public debate is so low. They often do not seem able to connect the obvious dots.

Reflecting on our topic today of Consumer Protection in a Changing World, at the ACCC our work every year, and the past year in particular, brings new challenges. Technology brings access to more products, services or information that at any previous time in history but with it come new challenges. In the past year we’ve been working on issues as varied as the sharing economy, rogue online traders, and of course, raising awareness about scam artists finding ever-more sophisticated ways to part people from their hard-earned cash. We’re seeing new retail practices like “subscription traps” some of which do and some of which don’t comply with the Australian Consumer Law, and the challenges of working with and ensuring compliance with what is a truly global marketplace. 

I’d also like to highlight the recent data availability inquiry being undertaken by the Productivity Commission. The amount of data people share day to day is enormous, yet much of it is inaccessible to the people who created it. And often this is taken for granted by the consumer. It’s in this sort of situation that advocacy can make a significant impact. By fighting for the rights of the consumer in a changing digital landscape, you can help ensure that consumer protection moves with the times. And that consumers are not caused detriment by fast moving, disruptive technologies or by anti-competitive responses to those technologies by incumbent businesses.

Today I will very briefly talk about three things:

  1. some of the ACCC’s enforcement and compliance priorities for the coming year
  2. the ACL review and making the law work for us
  3. the power of consumer advocacy.

Priorities

Just a few weeks ago we announced our compliance and enforcement priorities for the year ahead.

Our consumer-focused priorities cover a diverse range of areas. 

We will be moving beyond the ‘traditional’ areas of consumer guarantees from, for example, consumers’ well-known rights for a repair, replacement or refund when sold defective goods such as clothing, electrical items and household appliances. This year we will look at more complex products such as motor vehicles and the provision of services in industries such as telecommunications and airline travel.

For example, in the airline industry we will be examining such matters as how representations about limitations on refunds for inflexible fares fits with consumer guarantee remedies and how the consumer guarantees could apply in relation to delayed or cancelled flights. 

Each of these investigations and possible actions will test the extent to which consumers are being directed away from their consumer guarantee rights and remedies in favour of manufacturer warranties or industry practice.

Our new car retailing market study will also look at the difficulties consumers face when trying to exercise their consumer guarantee rights and the factors that contribute to this. The study will go beyond consumer guarantees and cover issues such as access to data and efficiency and emission claims.

The access to data issues in particular have implications across many areas of interest to consumers.

Clarity around broadband speed advertising for consumers will also be a focus. Consumers are calling for standardised information to help them make informed comparisons between the different speeds available on the market.

To address this, we have published six principles to help ensure internet service providers’ claims about broadband speeds aren’t misleading under the Australian Consumer Law. We will also publish a best-practice broadband speeds advertising guide for providers in the coming months and we’re hoping there’s some more news to announce soon in relation to a broadband monitoring program.

Other consumer-focused areas that are strategic priorities of the ACCC this year include:

  • health insurance issues
  • education campaigns for business about the new County of Origin labelling laws
  • ensuring businesses comply with new excessive payment surcharge laws
  • consumer issues arising from commission-based sales business models, and
  • working with internet platform providers to prevent the supply of unsafe products into Australia.

ACL and penalties

As you all know, the Australian Consumer Law has been under review for the past year. Consumer groups have brought a lot to the table. Your experience with consumer issues and advocacy provided a valuable perspective to the review process.

We expect to receive the final report on the ACL review shortly. The review provided the opportunity to examine the law and determine what was working and what could be improved.

One point we have particularly advocated for during the review is the importance of penalties that act as an effective deterrent.

To be effective, the penalties handed out to companies that breach consumer laws have to make their boards and shareholders sit up and take notice. You will have heard me say this before, but the penalties as they currently stand simply do not resonate. And they certainly don’t reflect the detriment experienced by the consumer as a result of the misconduct.

Penalties should be seen as more than just a cost of doing business. And businesses should understand the seriousness of the issues involved with them breaking the law.

In this regard we are focussing on large businesses whose misconduct has wide-spread ramifications for consumers.

Three current cases demonstrate our commitment in this area. These matters, of course, remain before the Court and until proven are just our allegations.

We allege both Kimberly–Clark and Pental made misleading representations in relation to 'flushable' wipes. We allege these labels led consumers to believe these products were suitable to be flushed down the toilet, when this was not the case.

We allege that Volkswagen concealed software to cheat emissions testing and mislead consumers about their vehicle’s standards and emission levels during on road conditions.

Our action against Heinz concerns the alleged marketing of food products containing close to 70 per cent of sugar as a healthy food choice for toddlers.

Where the Court finds contraventions, it’s vital that large companies are held to account, but the penalties must make them sit up and take notice.

We strongly welcome recent messages from Federal Court judges that penalties must be high enough to provide sufficient deterrence.

In their joint decision on the Reckitt Benckiser appeal last year Justices Jagot, Yates and Bromwich stated: “The objective of any penalty in this case must be to ensure that Reckitt Benckiser and other ‘would-be wrongdoers’ think twice and decide not to act against the strong public interest”.

Justice Wigney, in his judgment on our proceedings against ANZ Bank and Macquarie Bank last December, stated: “A very sizable penalty is plainly required to deter a financial institution of the size of ANZ from engaging in such conduct again. Equally, a very sizeable penalty is required to deter institutions in positions similar to ANZ who might be tempted to engage in similar contravening conduct”.

Advocacy

The ACCC receives more than 200,000 contacts from consumers and small businesses a year. We investigate around 500 potential breaches of the Competition and Consumer Act, and take about 30 cases to court each year.

Our to-do list is never ending, and sadly, the ACCC will never go out of business while there are those still willing to take advantage, mislead, deceive or dupe consumers.

We can, of course, only do so much and while we are increasingly getting involved in consumer advocacy through our market study activities, it’s important that we highlight just what an important role the state and territory fair trading agencies and consumer groups play in protecting the rights of the consumer. We recognise and appreciate the work you all do.

State and fair trading agencies take on the job of enforcing the law. And they provide valuable mediation and dispute resolution services to consumers.

Consumer groups play a huge role through their tireless campaigns to bring fairness to the market for the consumer.

A notable example of the reach and effectiveness of these campaigns is evident in the recent agreement from several airlines to put an end to pre-selecting extras on their online booking platforms. We were able to leverage off the work done by CHOICE through their campaign; not to mention the work of our regulator colleagues in NZ.

As of December last year, following approaches from the ACCC, Jetstar, Tiger Air and Virgin all decided to discontinue the practice of preselection for online bookings. This ensures that consumers are not inadvertently paying for ‘pre-ticked’ optional extras when booking airfares.

An area of focus for this year is ensuring adequate consumer protections exist in markets supporting human services. The NDIS and self-directed care in aged care services are important reforms that provide for competition to drive better performance by providers and choice for consumers. However, the experience of VET FEE-HELP shows how vital it is us that effective safeguards and regulation is in place to ensure the market works and the vulnerable are protected.

Closing statements

It is a pleasure to once again be addressing the annual National Consumer Congress. I look forward to hearing more throughout the day about the excellent work being done by you all. If I can be permitted on final indulgence it is terrific news for consumers that the OPEC cartel seems to be failing. The lower petrol prices that can result are the best news I can think of for our consumers.

Thank you again for all you do.