Managing the impacts of COVID-19 disruption on consumers and business

Speakers: 
Mr Rod Sims, Chair
Conference: 
Gartner CEO Forum
8 April 2020

ACCC Chair Rod Sims spoke with a group of 70 CEOs and senior executives from a range of companies across Australasia about how the ACCC’s priorities have shifted to respond to the impact of COVID-19 on consumers and businesses. 

Transcript: 

Check against delivery.

COVID-19 Taskforce

The ACCC has moved quickly to reprioritise its work and direct resources towards delivering on issues stemming from the extraordinary economic disruption caused by COVID-19, which I will touch on today. We continue to deliver on pre-existing priorities or essential work but, like so many organisations, our focus has had to shift.

While we have closed our offices to the public, we are still operating surprisingly well. Our efforts to become a more flexible workforce over the past few years has paid off, with over 97 per cent of our employees now working from home each day. This is an enormous, complex shift and one I am sure many of you have had to navigate yourselves.

The ACCC’s COVID-19 Taskforce is rapidly responding to a large number of issues impacting Australian consumers and businesses as a result of the COVID-19 pandemic.

We have received thousands of phone calls, emails and social media reports from consumers and businesses seeking information and are working swiftly to address areas of harm to consumers and advising businesses about their obligations.

The ACCC Taskforce is focusing on early intervention by engaging directly with businesses, relevant state and federal government agencies, and consumer and other representative groups.

Our aim is to address immediate problems being faced by consumers in relation to cancellation of services and failure to obtain refunds and remedies, and working with expert teams across the agency to ensure we can quickly get to the heart of the issues being raised with the ACCC and work to fix them.

Below I will outline a number of successful early interventions by the ACCC Taskforce and other discussions and investigations that are continuing.

Cancelled travel and accommodation services

Various restrictions in place for domestic and international travel have been the main source of consumer complaints. Many consumers are unhappy with the remedies being offered.

  • Travel services provider: after receiving a high number of complaints around the charging of 'change fees' in circumstances where flights were cancelled, the ACCC contacted the business, which agreed not to charge for changes to existing bookings and agreed to offer a fee free travel credit to consumers. There are however continuing issues in relation to another type of conduct by that same business that the ACCC is working to resolve, along with other state and territory fair trading agencies.
  • The ACCC is also following up several businesses selling package tours that are alleged to have recently changed contract terms and conditions. The companies are assessing customer claims for refunds or credits vouchers on the basis of the new terms, rather than the former contract terms that were in place when the consumer booked the package.
  • A second travel services provider: the ACCC is working to resolve a concerning issue receiving a large number of customer complaints, with allegations that the business is failing to provide refunds in line with its terms and conditions.
  • Council of Travel Operators: the ACCC has met with the Council in an attempt to understand the various issues impacting a number of travel companies and the impact that this is having on consumers.
  • Airline: The Taskforce contacted the airline following reports of incorrect advice being given around refunds. The errors were attributed to issues impacting overseas call centres, unprecedented demand, and new team members rapidly joining teams. Senior staff apologised for the error and have ensured correct advice is being provided to all impacted customers.

Subscription services – gyms, food and pay TV

With the restrictions imposed by governments at all levels in relation to social distancing and businesses being able to remain open, operations of certain businesses, there have been a considerable number of reports of consumers navigating these changes.

  • A major gym chain: was charging customers a weekly ‘freeze’ fee for the period their gyms will be closed. Following the Taskforce’s intervention, the gym immediately ceased this practice.
  • There are a number of other gyms that continue to deduct these fees and the ACCC is contacting them directly.
  • In the franchising sector there are reports that some franchisors are still trying to collect franchising fees, when the businesses have minimised their operations. This is a matter that the ACCC is following up as a matter of urgency.
  • Foxtel: a number of complaints from consumers unable to contact Foxtel to cancel or suspend subscriptions. It has assured the ACCC Taskforce it was urgently increasing call centre capacity which had been shut down because of COVID-19 lockdown measures overseas.
  • A subscription meals provider was unable to source supply to meet its orders and contractual obligations. The Taskforce contacted the business and the business undertook to provide full refunds to impacted customers.

Payment process providers for the fitness industry

After hearing that payment processors were suspending debits being made on behalf of small business gyms and fitness studios on the basis of 'ACCC advice', the Taskforce contacted them to ensure that their clients were not being unfairly treated.

We were informed that the companies wanted to ensure they were collecting payments from consumers who had signed up for new services. We also obtained assurances that the businesses had the ability to contact these finance companies if there were problems with customers’ accounts.  

COVID-19 product claims

Some business have represented to consumers that they sell a product that prevents COVID-19 or they provide a service that prevents infection by COVID-19.

  • The ACCC was alerted to an ASX listed company claiming that its hand sanitiser product it had been tested as effective against COVID-19, when it was tested against a recognised surrogate. The company subsequently clarified the statement it made to the ASX.
  • The Taskforce is investigating claims that a company is alleged to be urging consumers to get their plumbing serviced to prevent the spread of COVID-19.

Excessive price increases, also known as price gouging

In relation to COVID-19 there have a large number of complaints regarding excessive pricing around personal protective equipment (face masks and sanitiser) and some other grocery items.

The ACCC cannot prevent or take action to stop excessive pricing, as it has no role in setting prices. But in some circumstances excessive pricing may be unconscionable, for example where the product is critical to the health or safety of vulnerable consumers. If a business makes misleading claims about the reason for price increases, it will be breaching the Australian Consumer Law.

  • Recently the Australian Federal Police has been given new powers under the Biosecurity Act to prevent price gouging. The prescribed products are disposable gloves, disposable gowns, goggles, glasses, or eye visors used for limiting the transmission of organisms to humans, or of alcohol wipes and hand sanitiser. It is now an offence to resell or offer to resell these products, if they were purchased in a retail transaction, at 20 per cent or higher than the original price paid.
  • Online platforms: the ACCC engaged with Amazon, Facebook, eBay and Gumtree to understand measures the companies have in place to prevent the sale of these products at excessive prices. We received some assurances the platforms have mechanisms in place, but are encouraging increased vigilance and will continue to monitor.
  • Supermarkets: the unprecedented demand for supermarket goods has also created shortages across a range of other product lines, which has impacted supply. We have also heard a number of concerns about the high price of some fresh produce, including fruit, vegetables and meat. Higher fresh produce prices had been predicted as early as January due to the drought and the bushfires, which have contributed to a supply shortage and led to higher prices for some items.

Private health insurance

  • The ACCC received complaints that consumers were not able to access all services offered under the policies but are still required to pay the premiums.
  • Private health insurers are generally not passing on premium increases by giving consumers a ‘credit’ for the new increase, which means that their premiums remain the same as they were before 1 April 2020.
  • The ACCC recommends that private health insurers provide remedies for consumers for services that can no longer be provided or only provided to a limited extent due to COVID-19 restrictions, such as dental, optical, physio, etc.

The full list of FAQs includes further detail on:

  • cancellation of flights/travel
  • cancellation of events
  • gymnasium services
  • weddings
  • product price increases
  • material changes to contracted services
  • telecommunication issues
  • country of origin labelling issues.

Information is being regularly added and updated on the ACCC website:

Consumers: accc.gov.au/covid19

Small business: accc.gov.au/covid19sb

Interim authorisations

In the past three weeks the ACCC has granted interim authorisation to a number of sectors to ensure the economy is able to function and provide essential goods, services, medicines and medical equipment, and hardship relief during the COVID-19 pandemic.

This has included 14 separate interim authorisations, which allow for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. We still have a number of applications for interim authorisation to be considered by the Commission, which is currently meeting to make statutory decisions a number of times each week to deal with the surge.

The following interim authorisations have been granted to enable firms to cooperate during the COVID-19 pandemic, and can be reviewed at any time. The ACCC will closely monitor the activity being undertaken. Each will now be subject to a consultation period and a final decision made following further investigation and feedback from stakeholders.

The ACCC can decide to grant formal authorisation in circumstances where it is satisfied that the public benefit from the conduct outweighs any public detriment.

  • Banks have been authorised to cooperate on loan relief package for consumers and small businesses
  • Supermarkets will be able to cooperate on grocery supply when working with manufacturers, suppliers, and transport and logistics providers.
  • Medicine wholesalers will be able to co-operate to facilitate distribution of essential medication and pharmacy products after being granted interim authorisation by the ACCC.
  • Airlines are able to coordinate ­flight schedules on ten regional flight routes, including revenue sharing, with an agreement not to raise fare prices
  • Gas and electricity companies to cooperate on energy supply and ensure integrity of wholesale markets
  • Medical suppliers allowed to work together to expand capacity in order to produce urgently needed equipment.
  • Oil companies allowed to co-operate to secure fuel supply, including crude oil and refined fuels, importers, suppliers of storage facilities and trucking or delivery services and wholesalers.
  • NBN Co and telecommunications providers able to work together to manage on demand surge, wholesale services and capacity challenges
  • Pharmaceutical companies will be able to co-operate to facilitate distribution of essential medication and pharmacy products
  • Insurers are able to coordinate on deferred payments and refunds under small business relief package
  • Shopping centre owners and managers given interim authorisation to discuss and implement rent relief measures for small to medium shopping centre tenants facing hardship
  • Private hospitals in Victoria and in Queensland are able to coordinate between each other and state health agencies and public hospitals

As the ACCC monitors these authorisations it will watch for ways in which smaller players can be disadvantaged. For example, the ACCC has urged state governments that while supermarkets will always remain open during this pandemic, so must smaller local food retailers, like butchers and green grocers. It would be extremely unfortunate if this pandemic were to see a consolidation in the grocery sector as supplies narrow to supermarkets in ways that will be hard to reverse.

Authorisations register: accc.gov.au/public-registers

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